PRELIMINARY OFFICIAL STATEMENT DATED AUGUST 12, 2020 This Preliminary Official Statement is subject to completion and amendment and is intended solely for the purpose of soliciting initial bids on the Bonds. Upon the sale of the Bonds, the Official Statement will be completed and delivered to the Underwriter.

IN THE OPINION OF BOND COUNSEL, UNDER EXISTING LAW, INTEREST ON THE BONDS IS EXCLUDABLE FROM GROSS INCOME FOR FEDERAL INCOME TAX PURPOSES AND INTEREST ON THE BONDS IS NOT SUBJECT TO THE ALTERNATIVE MINIMUM TAX ON INDIVIDUALS. SEE “TAX MATTERS” FOR A DISCUSSION OF THE OPINION OF BOND COUNSEL.

THE BONDS WILL BE DESIGNATED AS “QUALIFIED TAX-EXEMPT OBLIGATIONS” FOR FINANCIAL INSTITUTIONS. SEE “TAX MATTERS—QUALIFIED TAX-EXEMPT OBLIGATIONS.” NEW ISSUE - Book-Entry-Only

$6,215,000 HARRIS COUNTY MUNICIPAL UTILITY DISTRICT NO. 473

(A political subdivision of the State of Texas located within Harris County) UNLIMITED TAX BONDS, SERIES 2020

Dated: October 1, 2020 Due: October 1, as shown below

Principal of the bonds described above (the “Bonds”) will be payable at stated maturity or redemption upon presentation of the Bonds at the principal payment office of the paying agent/registrar, initially The Bank of New York Mellon Trust Company, N.A. (the “Paying Agent/Registrar,” “Paying Agent” or “Registrar”) in Dallas, Texas. Interest on the Bonds will accrue from October 1, 2020 and is payable each April 1 and October 1, commencing April 1, 2021 (six months of interest) until the earlier of maturity or redemption. Interest will be calculated on the basis of a 360-day year of twelve 30-day months. The Bonds will be issued only in fully registered form in $5,000 denominations or integral multiplies thereof. The Bonds are subject to redemption prior to maturity as shown below.

The Bonds will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York (“DTC”), which will act as securities depository for the Bonds. Beneficial owners of the Bonds will not receive physical certificates representing the Bonds but will receive a credit balance on the books of the nominees of such beneficial owners. So long as Cede & Co. is the registered owner of the Bonds, the principal of and interest on the Bonds will be paid by the Paying Agent directly to DTC, which will, in turn, remit such principal and interest to its participants for subsequent disbursement to the beneficial owners of the Bonds as described herein. See “BOOK-ENTRY-ONLY SYSTEM.”

MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES AND INITIAL REOFFERING YIELDS

(a) The Underwriter (as defined herein) may elect to designate one or more term bonds. See accompanying Official Notice of Sale and Official Bid Form. (b) Initial reoffering yield represents the initial offering yield to the public which has been established by the Underwriter (as herein defined) for offers to the

public and which may be subsequently changed by the Underwriter and is the sole responsibility of the Underwriter. The initial reoffering yields indicated above represent the lower of the yields resulting when priced at maturity or to the first call date. Accrued interest from October 1, 2020, is to be added to the price.

(c) CUSIP Numbers have been assigned to the Bonds by CUSIP Service Bureau and are included solely for the convenience of the purchasers of the Bonds. Neither the District nor the Underwriter shall be responsible for the selection or correctness of the CUSIP Numbers set forth herein.

(d) Bonds maturing on and after October 1, 2026, are subject to redemption prior to maturity at the option of the District, in whole or from time to time in part, on October 1, 2025, or on any date thereafter, at a price equal to the principal amount thereof plus accrued interest to the date fixed for redemption. See “THE BONDS—Redemption Provisions.”

The Bonds, when issued, will constitute valid and legally binding obligations of Harris County Municipal Utility District No. 473 (the “District”) and will be payable from the proceeds of an annual ad valorem tax, without legal limitation as to rate or amount, levied against all taxable property located within the District. The Bonds are obligations solely of the District and are not obligations of the State of Texas, Harris County, the City of Baytown or any entity other than the District. The Bonds are subject to special investment risks described herein. See “RISK FACTORS.”

The Bonds are offered by the Underwriter subject to prior sale, when, as and if issued by the District and accepted by the Underwriter, subject, among other things, to the approval of the Bonds by the Attorney General of Texas and the approval of certain legal matters by Allen Boone Humphries Robinson LLP, Bond Counsel. Delivery of the Bonds through the facilities of DTC is expected on or about October 15, 2020.

Bids Due: Wednesday, September 9, 2020, at 10:15 A.M., Houston Time in Houston, Texas Bid Award: Wednesday, September 9, 2020, at 12:00 Noon, Houston Time in Houston, Texas

Initial InitialDue Principal Interest Reoffering CUSIP Due Principal Interest Reoffering CUSIP

(October 1) Amount (a) Rate Yield (b) Number (c) (October 1) Amount (a) Rate Yield (b) Number (c)

2022 160,000$ 2034 255,000$ (d)2023 165,000 2035 265,000 (d)2024 170,000 2036 275,000 (d)2025 180,000 2037 285,000 (d)2026 185,000 (d) 2038 300,000 (d)2027 195,000 (d) 2039 310,000 (d)2028 200,000 (d) 2040 320,000 (d)2029 210,000 (d) 2041 335,000 (d)2030 220,000 (d) 2042 350,000 (d)2031 225,000 (d) 2043 365,000 (d)2032 235,000 (d) 2044 375,000 (d)2033 245,000 (d) 2045 390,000 (d)

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TABLE OF CONTENTS

MATURITIES, PRINCIPAL AMOUNTS, INTEREST RATES AND INITIAL REOFFERING YIELDS ...................................... 1 OFFICIAL STATEMENT SUMMARY ............................................................................................................................................. 3 SELECTED FINANCIAL INFORMATION ...................................................................................................................................... 8 RISK FACTORS ................................................................................................................................................................................. 9 THE BONDS ..................................................................................................................................................................................... 17 BOOK-ENTRY-ONLY SYSTEM ..................................................................................................................................................... 21 THE DISTRICT ................................................................................................................................................................................. 22 MANAGEMENT ............................................................................................................................................................................... 24 THE DEVELOPER .......................................................................................................................................................................... 25 THE PRINCIPAL TAXPAYERS AND MAJOR LANDOWNER .............................................................................................. 26 THE WATER SUPPLY AND WASTEWATER TREATMENT SYSTEM ..................................................................................... 27 USE AND DISTRIBUTION OF BOND PROCEEDS ...................................................................................................................... 28 UNLIMITED TAX BONDS AUTHORIZED BUT UNISSUED ...................................................................................................... 28 FINANCIAL STATEMENT ............................................................................................................................................................. 29 ESTIMATED OVERLAPPING DEBT STATEMENT .................................................................................................................... 30 TAX DATA ....................................................................................................................................................................................... 31 TAX PROCEDURES ........................................................................................................................................................................ 33 GENERAL FUND ............................................................................................................................................................................. 38 DEBT SERVICE REQUIREMENTS ................................................................................................................................................ 39 LEGAL MATTERS ........................................................................................................................................................................... 40 TAX MATTERS ................................................................................................................................................................................ 40 SALE AND DISTRIBUTION OF THE BONDS .............................................................................................................................. 42 PREPARATION OF OFFICIAL STATEMENT ............................................................................................................................... 43 CONTINUING DISCLOSURE OF INFORMATION ...................................................................................................................... 44 MISCELLANEOUS .......................................................................................................................................................................... 46 AERIAL PHOTOGRAPH ................................................................................................................................................................. 47 PHOTOGRAPHS OF THE DISTRICT ............................................................................................................................................. 48 AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDED JUNE 30, 2019 .......................................... APPENDIX A

USE OF INFORMATION IN OFFICIAL STATEMENT For purposes of compliance with Rule 15c2-12 of the Securities and Exchange Commission, as amended and in effect on the date hereof, this document constitutes an Official Statement with respect to the Bonds that has been “deemed final” by the District as of its date except for the omission of no more than the information permitted by Rule 15c2-12. No dealer, broker, salesman or other person has been authorized to give any information or to make any representations other than those contained in this Official Statement, and, if given or made, such other information or representation must not be relied upon as having been authorized by the District. This Official Statement is not to be used in an offer to sell or the solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation. All of the summaries of the statutes, resolutions, orders, contracts, audited financial statements, engineering and other related reports set forth in this Official Statement are made subject to all of the provisions of such documents. These summaries do not purport to be complete statements of such provisions, and reference is made to such documents, copies of which are available from Allen Boone Humphries Robinson LLP, 3200 Southwest Freeway, Suite 2600, Houston, Texas, 77027, upon payment of duplication costs. This Official Statement contains, in part, estimates, assumptions and matters of opinion which are not intended as statements of fact, and no representation is made as to the correctness of such estimates, assumptions or matters of opinion, or as to the likelihood that they will be realized. Any information and expressions of opinion herein contained are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the District or other matters described herein since the date hereof. However, the District has agreed to keep this Official Statement current by amendment or sticker to reflect material changes in the affairs of the District and, to the extent that information actually comes to its attention, the other matters described in this Official Statement until delivery of the Bonds to the Underwriter and thereafter only as specified in “PREPARATION OF OFFICIAL STATEMENT—Updating the Official Statement.”

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OFFICIAL STATEMENT SUMMARY The following information is qualified in its entirety by the detailed information appearing elsewhere in this Official Statement.

THE FINANCING The Issuer ....................................... Harris County Municipal Utility District No. 473 (the “District”), a political subdivision of the

State of Texas, is located in Harris County, Texas and the City of Baytown. See “THE DISTRICT.”

The Issue ........................................ $6,215,000 Unlimited Tax Bonds, Series 2020 (the “Bonds”) are issued pursuant to a

resolution (the “Bond Resolution”) of the District’s Board of Directors and are authorized pursuant to the election held within the District. See “THE BONDS—Authority for Issuance.” The Bonds will be issued as fully registered bonds maturing in the years and in the amounts and paying interest at the rates shown on the cover hereof. Interest on the Bonds accrues from October 1, 2020 and is payable on April 1, 2021 (six months of interest), and on each October 1 and April 1 thereafter until the earlier of maturity or prior redemption. See “THE BONDS.”

The Bonds maturing on and after October 1, 2026, are subject to redemption, in whole or from time to time in part, at the option of the District, prior to their maturity dates, on October 1, 2025, or on any date thereafter. Upon redemption, the Bonds will be payable at a price of par plus accrued interest to the date of redemption. See “THE BONDS.”

Source of Payment ......................... The Bonds are payable from an annual ad valorem tax, without legal limitation as to rate or

amount, levied upon all taxable property within the District. See “TAX PROCEDURES.” The Bonds are obligations of the District and are not obligations of the State of Texas, Harris County, the City of Baytown or any other political subdivision or agency other than the District. See “THE BONDS—Source of and Security for Payment.”

Authority for Issuance ..................... The Bonds are the first series of bonds issued out of an aggregate of $33,900,000 principal

amount of unlimited tax bonds authorized by the District’s voters for the purpose of constructing water, sanitary sewer and drainage facilities and refunding of such bonds. The Bonds are issued by the District pursuant to the terms and provisions of an Order of the Texas Commission on Environmental Quality (the “TCEQ” or “Commission”), Article XVI, Section 59 of the Texas Constitution, Chapters 49 and 54 of the Texas Water Code, as amended, the general laws of the State of Texas, and the Bond Resolution. See “THE BONDS—Authority for Issuance.”

Payment Record .............................. The District has no prior debt history. Use of Proceeds ............................. Proceeds from the Bonds will be used to pay for the items shown herein under “USE AND

DISTRIBUTION OF BOND PROCEEDS,” including twelve months of capitalized interest, developer interest, certain costs associated with the operation of the District and costs associated with the issuance of the Bonds. See “USE AND DISTRIBUTION OF BOND PROCEEDS.”

Qualified Tax-Exempt

Obligations ............................... The Bonds will be designated as “qualified tax-exempt obligations” for financial institutions. See “TAX MATTERS—Qualified Tax-Exempt Obligations.”

Municipal Bond Rating ................. The District has not applied for an underlying investment grade rating nor is it expected that

the District would have been successful if such application had been made. Bond Counsel ............................... Allen Boone Humphries Robinson LLP, Bond Counsel, Houston, Texas. See

“MANAGEMENT,” “LEGAL MATTERS,” and “TAX MATTERS.” Financial Advisor ......................... Masterson Advisors LLC, Houston, Texas. See “MANAGEMENT.” District Engineer .......................... Culp Engineering, LLC, Houston, Texas. Disclosure Counsel ....................... McCall, Parkhurst & Horton L.L.P., Houston, Texas.

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INFECTIOUS DISEASE OUTLOOK (COVID-19)

General ......................................... The World Health Organization has declared a pandemic following the outbreak of COVID-19, a respiratory disease caused by a new strain of coronavirus (the “Pandemic”), which is currently affecting many parts of the world, including the United States and Texas. As described herein under “RISK FACTORS—Infectious Disease Outlook (COVID-19),” federal, state and local governments have all taken actions to respond to the Pandemic, including disaster declarations by both the President of the United States and the Governor of Texas. Such actions are focused on limiting instances where the public can congregate or interact with each other, which affects economic growth within Texas.

Impact ........................................... Since the disaster declarations were made, the Pandemic has negatively affected travel,

commerce, and financial markets locally and globally, and is widely expected to continue negatively affecting economic growth and financial markets worldwide and within Texas.

Such adverse economic conditions, if they continue, could result in declines in the demand for

residential and commercial property in the Houston area and could reduce or negatively affect property values within the District. The Bonds are secured by an unlimited ad valorem tax, and a reduction in property values may require an increase in the ad valorem tax rate required to pay the Bonds as well as the District’s share of operations and maintenance expenses payable from ad valorem taxes.

While the potential impact of COVID-19 on the District cannot be quantified at this time, the continued outbreak of COVID-19 could have an adverse effect on the District’s operations and financial condition. The financial and operating data contained herein are the latest available but are as of dates and for periods prior to the economic impact of the Pandemic and measures instituted to slow it. Accordingly, they are not indicative of the economic impact of the Pandemic on the District’s financial condition. See “RISK FACTORS—Infectious Disease Outlook (COVID-19).”

EXTREME WEATHER; HURRICANE HARVEY

General ........................................ The greater Houston area, including Harris County, is subject to occasional severe weather

events, including tropical storms and hurricanes. If the District were to sustain damage to its facilities requiring substantial repair or replacement, or if substantial damage were to occur to taxable property within the District as a result of such a weather event, the investment security of the Bonds could be adversely affected. The greater Houston area has experienced multiple storms exceeding a 0.2% probability (i.e. “500‐year flood” events) since 2015, including Hurricane Harvey, which made landfall along the Texas Gulf Coast on August 25, 2017, and brought historic levels of rainfall during the successive four days.

Impact on the District .................. According to Culp Engineering, LLC, Houston, Texas. (the “Engineer”), the District’s System

(as defined herein) did not sustain any material damage and there was no interruption of water and sewer service as a result of Hurricane Harvey. According to Fuller Thompson Ten, Ltd. (the “Developer”), to the best of their knowledge, no structures within the District experienced structural flooding or other material damage as a result of Hurricane Harvey.

If a hurricane (or any other natural disaster) significantly damaged all or part of the improvements within the District, the assessed value of property within the District could be substantially reduced, with a corresponding decrease in tax revenues or necessity to increase the District’s tax rate. Further, there can be no assurance that a casualty loss to taxable property within the District will be covered by insurance (or that property owners will even carry flood insurance), that any insurance company will fulfill its obligation to provide insurance proceeds, or that insurance proceeds will be used to rebuild or repair any damaged improvements within the District. Even if insurance proceeds are available and improvements are rebuilt, there could be a lengthy period in which assessed values within the District would be adversely affected. See “RISK FACTORS—Severe Weather.”

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THE DISTRICT Description .................................... Harris County Municipal Utility District No. 473 (the “District”) is a municipal utility district

created under Article XVI, Section 59 of the Texas Constitution pursuant to an order of the Commission on March 1, 2006, and operates under the provisions of Article III, Section 52, Texas Constitution, Chapter 8250 of the Special District Local Laws Code, Chapters 49 and 54 of the Texas Water Code and other general statutes applicable to municipal utility districts. The District is located wholly within the corporate limits of the City of Baytown, Texas (“Baytown” or the “City”). The District contains approximately 198 acres of land, including approximately 59 acres of land annexed into the District on July 13, 2020 (the “Annexation Tract”).

Location ........................................ The District is located approximately 21 miles east of the Central Business District of Houston in

Harris County, Texas. Access to the District is provided by Thompson Road on the District’s eastern boundary, Interstate Highway 10 on the District’s northern boundary, and TX-330 on the District’s southwestern boundary. The Annexation Tract is noncontiguous to the original boundaries of the District and is located approximately 5 miles east of the original boundaries of the District at the intersection of Interstate Highway 10 on its northern boundary and Sjolander Road on its eastern boundary. See “AERIAL PHOTOGRAPH” herein.

Status of Development ................... The District is being developed as Thompson Ten Business Park for industrial, warehouse and

distribution purposes. Water, sanitary sewer and drainage facilities have been constructed to serve approximately 106 acres of developable land in the District, on which approximately 86 acres have vertical improvements and approximately 20 acres are not built upon. In addition, the District has approximately 59 acres that have not been provided water, sanitary sewer or storm drainage facilities (consisting of the Annexation Tract). Approximately 33 acres of undevelopable land consisting of Harris County Flood Control District right-of-way, street right-of-way, and detention reserves.

Development in Thompson Ten Business Park primarily consists of the following

warehouse/office/distribution facilities on approximately 86 acres: (1) an approximately 33,000 square foot warehouse/distribution facility owned by Vigavi Realty LLC and leased to Tidal Tank and Sprint Industrial (the “Tidal Tank Facility”) on approximately 14 acres, (2) two commercial warehouse/distribution/office buildings owned by Sealy IDV Thompson 10, LLC (the “Investment & Development Ventures Facility”) totaling approximately 390,000 square feet on approximately 27 acres, of which approximately 130,000 square feet have been leased to a cotton distribution company, (3) an approximately 35,000 square foot warehouse/distribution facility owned by Tuffi Company Inc. and leased to B&G Crane Service LLC (the “B&G Crane Service Facility”) on approximately 12 acres, (4) an approximately 25,000 square foot warehouse/distribution facility owned by TTBP Investments LLC and leased to Evergreen Tank (the “Evergreen Tank Facility”) on approximately 10 acres, (5) an approximately 30,000 square foot Clean as New Gulf Coast building (the “Clean as New Gulf Coast Facility”) on approximately 6 acres, (6) an approximately 118,000 square-foot warehouse/distribution/office facility recently constructed and owned by Adkisson Development Group (the “ADG Facility”) on approximately 9 acres, and (7) an approximately 15,000 square foot warehouse/office building owned by Lance Real Estate Investment, LLC (the “Lance Facility”) on approximately 8 acres. In addition, the Developer, as defined below, recently sold a 10-acre vacant tract to The Modern Group and two vacant tracts totaling 10 acres to Quality Mat Company. Neither The Modern Group nor Quality Mat Company has started construction on their sites. See “THE DISTRICT—Status of Development.”

Principal Taxpayers ...................... Based upon the 2019 certified tax rolls, the top ten taxpayers are responsible for approximately

91.16% ($39,650,310) of the District’s 2019 taxes. Sprint Safety, a subsidiary of Sprint Industrial which is a subsidiary of Republic Services, Inc., is the largest taxpayer within the District. Sprint Safety, which represents approximately 19.24% ($8,370,199) of the certified portion of the District’s 2019 Taxable Assessed Valuation, owns a portion of the personal property in the Tidal Tank Facility. The second largest taxpayer is Vigavi Realty LLC, which represents approximately 14.77% ($6,424,706) of the certified portion of the District’s 2019 Taxable Assessed Value, consisting of the approximately 33,000 square foot warehouse/distribution Tidal Tank Facility. The fourth largest taxpayer is Tidal Tank, which represents approximately 10.42% ($4,534,096) of the certified portion of the District’s 2019 Taxable Assessed Value, consisting of a portion of the personal property in the Tidal Tank Facility. In the aggregate, the value of the property owned by these three taxpayers is $19,329,001 or approximately 44.44% of the District’s 2019 Taxable Assessed Value. The Tidal Tank Facility opened in 2016 and provides specialized industrial equipment (liquid and solid storage tanks) for the energy, industrial and environmental sectors.

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The third largest taxpayer is Sealy IDV Thompson 10, LLC, which represents approximately 11.28% ($4,908,620) of the certified portion of the District’s 2019 Taxable Assessed Value, consisting of the approximately 390,000 square foot Investment & Development Ventures Facility, of which approximately 130,000 square feet has been leased to a cotton distribution company.

The fifth largest taxpayer is Tuffi Company, Inc., which represents approximately 10.19%

($4,433,640) of the certified portion of the District’s 2019 Taxable Assessed Value, consisting of the approximately 33,000 square foot B&G Crane Service Facility. The seventh largest taxpayer is B&G Crane Services, LLC, which represents 5.04% ($2,193,734) of the certified portion of the District’s 2019 Taxable Assessed Value, consisting of the personal property in the B&G Crane Service Facility. B&G Crane Service, LLC is a subsidiary of Maxim Crane Works, L.P. In aggregate, the value of the property owned by these two taxpayers is $6,627,374 or approximately 15.24% of the District’s 2019 Taxable Assessed Value. The B&G Crane Service Facility opened in 2015, and B&G provides crane rental and lifting services.

The sixth largest taxpayer is TTBP Investments LLC, which represents approximately 7.12%

($3,095,547) of the certified portion of the District’s 2019 Taxable Assessed Value, consisting of the approximately 25,000 square foot Evergreen Tank Facility. Evergreen Tank is a subsidiary of Mobile Mini Solutions and is a supplier of a large variety of storage tanks and trucks. The Evergreen Tank Facility opened in 2018.

Approximately 41.68% ($18,131,130) of the certified 2019 taxable appraised valuation is

personal property. See “THE DISTRICT—Status of Development,” “THE PRINCIPAL TAXPAYERS AND MAJOR LANDOWNER,” “TAX DATA—Principal Taxpayers, Summary of Assessed Valuation” and “RISK FACTORS—Dependence on Personal Property Tax Collections.”

The Major Landowner .................. Gateway 10 Business Park, LLC is the owner of approximately 59 acres of land which was

annexed into the boundaries of the District on July 13, 2020 and is referred to herein as the Annexation Tract. Such acreage is not served with utilities and does not have any vertical improvements built upon it. The taxable value associated with such acreage is unknown at this time and will not appear on the District’s tax roll until January 1, 2021. Such acreage is planned for light industrial development. See “THE PRINCIPAL TAXPAYERS AND MAJOR LANDOWNER.”

The Developer ............................... The developer of the Thompson Ten Business Park is Fuller Thompson Ten, Ltd., a Texas

limited partnership (the “Developer”) created for the sole purpose of developing the land in the District. The general partner of the Developer is Fuller Thompson GP LLC, a Texas limited liability company. With the consent of the District and pursuant to a development financing agreement, the Developer has financed and, subject to certain conditions, is entitled to be reimbursed by the District for the design and construction of certain water, sanitary sewer, drainage, and road facilities. The Developer recently sold a 10-acre vacant tract to The Modern Group and two vacant tracts totaling 10 acres to Quality Mat Company and no longer owns any developable acreage in the District. See “THE DEVELOPER.”

The System .................................... The District receives water supply and wastewater treatment directly from the City of Baytown

(the “City”). The District does not own or operate a water supply or wastewater treatment plant facility. The District has entered into a Utility Functions and Services Allocation Agreement as amended (the “Utility Agreement”) with the City. The Utility Agreement provides the terms and conditions whereby the land within the District will be served by the City’s water and sewer systems. The City has reserved adequate water supplies and wastewater treatment capacity to serve the District at build out. See “THE WATER SUPPLY AND WASTEWATER TREATMENT SYSTEM.”

The Utility Agreement ................... The District has entered into the Utility Agreement with the City. The Utility Agreement (i)

describes how the Facilities (as defined therein) servicing the District will be constructed; (ii) provides that upon completion and acquisition of the Facilities by the District, that the District will convey the Facilities (but not the stormwater detention system) to the City for operation and maintenance; and (iii) provides that all revenues derived from water and sewer utilities serving the District are revenues of and belong to the City. The Utility Agreement also provides for the terms of the dissolution of the District by the City and the assumption of the District’s obligations (including the Bonds and any future outstanding bonds) by the City upon dissolution. See “THE DISTRICT—Utility Functions and Services Allocation Agreement with the City of Baytown.”

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RISK FACTORS

THE PURCHASE AND OWNERSHIP OF THE BONDS ARE SUBJECT TO SPECIAL RISK FACTORS AND ALL PROSPECTIVE PURCHASERS ARE URGED TO EXAMINE CAREFULLY THIS ENTIRE OFFICIAL STATEMENT WITH RESPECT TO THE INVESTMENT SECURITY OF THE BONDS, INCLUDING PARTICULARLY THE SECTION CAPTIONED “RISK FACTORS.”

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SELECTED FINANCIAL INFORMATION 2019 Certified Taxable Assessed Valuation .................................................................................................... $43,497,567 (a) 2020 Preliminary Taxable Assessed Valuation ................................................................................................ $70,495,190 (b) Estimated Taxable Assessed Valuation as of June 1, 2020 ............................................................................... $75,736,751 (c) Gross Debt Outstanding (after the issuance of the Bonds) ............................................................................... $6,215,000 Estimated Overlapping Debt ............................................................................................................................ 3,889,239 (d)

Gross Debt and Estimated Overlapping Debt ........................................................................................... $10,104,239 (d) Ratios of Gross Debt to:

2020 Preliminary Taxable Assessed Valuation ......................................................................................... 8.82% Estimated Taxable Assessed Valuation as of June 1, 2020 ....................................................................... 8.21%

Ratios of Gross Debt and Estimated Overlapping Debt to:

2020 Preliminary Taxable Assessed Valuation ......................................................................................... 14.33% Estimated Taxable Assessed Valuation as of June 1, 2020 ....................................................................... 13.34%

2019 Tax Rate:

Debt Service ............................................................................................................................................... $0.00 Maintenance and Operations ...................................................................................................................... 0.80

Total ....................................................................................................................................................... $0.80/$100 A.V. Anticipated 2020 Tax Rate:

Debt Service ............................................................................................................................................... $0.62 Maintenance and Operations ...................................................................................................................... 0.18

Total ....................................................................................................................................................... $0.80/$100 A.V. Average percentage of total tax collections (2019) .......................................................................................... 100.00% Projected Maximum Annual Debt Service Requirements (2030)

of the Bonds at an assumed interest rate of 4.00% (“Maximum Annual Requirement”) ......................................................................................................... $405,600 (e)

Projected Average Annual Debt Service Requirements (2022-2045) of the Bonds at an assumed interest rate of 4.00% (“Average Annual Requirement”) ............................................................................................................ $402,421(e)

Tax rate required to pay Maximum Annual Requirement based upon:

2020 Preliminary Taxable Assessed Valuation at a 90% collection rate .................................................. $0.64/$100 A.V. (f) Estimated Taxable Assessed Valuation as of June 1, 2020 at a 90% collection rate ................................. $0.60/$100 A.V. (f)

Tax rate required to pay Average Annual Requirement based upon: 2020 Preliminary Taxable Assessed Valuation at a 90% collection rate .................................................. $0.64/$100 A.V. (f) Estimated Taxable Assessed Valuation as of June 1, 2020 at a 90% collection rate ................................. $0.60/$100 A.V. (f)

Area of District — 198 acres

(a) As certified by the Harris County Appraisal District (the “Appraisal District”). Such amount does not include the “Annexation Tract.” See “TAX PROCEDURES.”

(b) Provided by the Appraisal District as a preliminary indication of the 2020 taxable value (as of January 1, 2020), including personal property taxable value from tax year 2019 in the amount of $18,131,130. Such amount is subject to protest, review and downward adjustment prior to certification. No tax will be levied on such amount until it is certified. Such amount does not include the “Annexation Tract.” See “TAX PROCEDURES.”

(c) Provided by the Appraisal District for informational purposes only. Such amounts reflect an estimate of the taxable appraised value within the District on June 1, 2020. No tax will be levied on such amount. Taxes are levied on taxable value certified by the Appraisal District as of January 1 of each year. Such amount does not include the “Annexation Tract.” See “TAX PROCEDURES.”

(d) See “ESTIMATED OVERLAPPING DEBT STATEMENT.” (e) See “DEBT SERVICE REQUIREMENTS.” (f) See “TAX DATA—Tax Adequacy for Debt Service.”

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PRELIMINARY OFFICIAL STATEMENT

$6,215,000

HARRIS COUNTY MUNICIPAL UTILITY DISTRICT NO. 473 (A political subdivision of the State of Texas located within Harris County)

UNLIMITED TAX BONDS

SERIES 2020

This Official Statement provides certain information in connection with the issuance by Harris County Municipal Utility District No. 473 (the “District”) of its $6,215,000 Unlimited Tax Bonds, Series 2020 (the “Bonds”). The Bonds are issued by the District pursuant to the terms and provisions of an Order of the Texas Commission on Environmental Quality (the “TCEQ”), Article XVI, Section 59 of the Texas Constitution, Chapters 49 and 54 of the Texas Water Code, as amended, a resolution authorizing the issuance of the Bonds (the “Bond Resolution”) adopted by the Board of Directors of the District (the “Board”), and an election held within the District. This Official Statement includes descriptions, among others, of the Bonds and the Bond Resolution, and certain other information about the District and Fuller Thompson Ten, Ltd. (the “Developer”), the developer of most of the land within the District. All descriptions of documents contained herein are only summaries and are qualified in their entirety by reference to each document. Copies of documents may be obtained from the District upon payment of the costs of duplication therefor.

RISK FACTORS General The Bonds are obligations solely of the District and are not obligations of the City of Baytown, Harris County, the State of Texas, or any entity other than the District. Payment of the principal of and interest on the Bonds depends upon the ability of the District to collect taxes levied on taxable property within the District in an amount sufficient to service the District’s bonded debt or in the event of foreclosure, on the value of the taxable property in the District and the taxes levied by the District and other taxing authorities upon the property within the District. See “THE BONDS—Source of Payment.” The collection by the District of delinquent taxes owed to it and the enforcement by Registered Owners of the District’s obligation to collect sufficient taxes may be a costly and lengthy process. Furthermore, the District cannot and does not make any representations that taxable property within the District will maintain taxable values sufficient to justify continued payment of taxes by property owners or that there will be a market for the property or that owners of the property will have the ability to pay taxes. See “Registered Owners’ Remedies” within. Infectious Disease Outlook (COVID-19) The World Health Organization has declared a pandemic following the outbreak of COVID-19, a respiratory disease caused by a new strain of coronavirus (the “Pandemic”), which is currently affecting many parts of the world, including the United States and Texas. On January 31, 2020, the Secretary of the United States Health and Human Services Department declared a public health emergency for the United States in connection with COVID-19. On March 13, 2020, the President of the United States (the “President”) declared the Pandemic a national emergency and the Texas Governor (the “Governor”) declared COVID-19 an imminent threat of disaster for all counties in Texas (collectively, the “disaster declarations”). On March 25, 2020, in response to a request from the Governor, the President issued a Major Disaster Declaration for the State of Texas.

Pursuant to Chapter 418 of the Texas Government Code, the Governor has broad authority to respond to disasters, including suspending any regulatory statute prescribing the procedures for conducting state business or any order or rule of a state agency that would in any way prevent, hinder, or delay necessary action in coping with this disaster and issuing executive orders that have the force and effect of law. The Governor has issued a number of executive orders relating to COVID-19 preparedness and mitigation. Many of the federal, state and local actions and policies under the aforementioned disaster declarations are focused on limiting instances where the public can congregate or interact with each other, which affects economic growth within Texas.

Since the disaster declarations were made, the Pandemic has negatively affected travel, commerce, and financial markets locally and globally, and is widely expected to continue negatively affecting economic growth and financial markets worldwide and within Texas. Stock values and crude oil prices, in the U.S. and globally, have seen significant declines attributed to COVID-19 concerns. Texas may be particularly at risk from any global slowdown, given the prevalence of international trade in the state and the risk of contraction in the oil and gas industry and spillover effects into other industries.

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Such adverse economic conditions, if they continue, could result in declines in the demand for residential and commercial property in the Houston area and could reduce or negatively affect property values within the District. The Bonds are secured by an unlimited ad valorem tax, and a reduction in property values may require an increase in the ad valorem tax rate required to pay the Bonds as well as the District’s operations and maintenance expenses payable from ad valorem taxes. While the potential impact of the Pandemic on the District cannot be quantified at this time, the continued outbreak of the Pandemic could have an adverse effect on the District’s operations and financial condition. The financial and operating data contained herein are the latest available but are as of dates and for periods prior to the economic impact of the Pandemic and measures instituted to slow it. Accordingly, they are not indicative of the economic impact of the Pandemic on the District’s financial condition. Potential Effects of Oil Price Declines on the Houston Area The recent declines in oil prices in the U.S. and globally, which at times have led to the lowest such prices in three decades, may lead to adverse conditions in the oil and gas industry, including but not limited to reduced revenues, declines in capital and operating expenditures, business failures, and layoffs of workers. The economy of the Houston area has, in the past, been particularly affected by adverse conditions in the oil and gas industry, and such conditions and their spillover effects into other industries could result in declines in the demand for residential and commercial property in the Houston area and could reduce or negatively affect property values or homebuilding activity within the District. As previously stated, the Bonds are secured by an unlimited ad valorem tax, and a reduction in property values may require an increase in the ad valorem tax rate required to pay the Bonds as well as the District’s operations and maintenance expenses payable from ad valorem taxes. Severe Weather The greater Houston area, including Harris County, is subject to occasional severe weather events, including tropical storms and hurricanes. If the District were to sustain damage to its facilities requiring substantial repair or replacement, or if substantial damage were to occur to taxable property within the District as a result of such a weather event, the investment security of the Bonds could be adversely affected. The greater Houston area has experienced multiple storms exceeding a 0.2% probability (i.e. “500‐year flood” events) since 2015, including Hurricane Harvey, which made landfall along the Texas Gulf Coast on August 25, 2017, and brought historic levels of rainfall during the successive four days. According to the Engineer, the District’s System did not sustain any material damage and there was no interruption of water and sewer service as a result of Hurricane Harvey. According to Fuller Thompson Ten, Ltd. (the “Developer”), to the best of their knowledge, no structures within the District experienced structural flooding or other material damage as a result of Hurricane Harvey. If a hurricane (or any other natural disaster) significantly damaged all or part of the improvements within the District, the assessed value of property within the District could be substantially reduced, with a corresponding decrease in tax revenues or necessity to increase the District’s tax rate. Further, there can be no assurance that a casualty loss to taxable property within the District will be covered by insurance (or that property owners will even carry flood insurance), that any insurance company will fulfill its obligation to provide insurance proceeds, or that insurance proceeds will be used to rebuild or repair any damaged improvements within the District. Even if insurance proceeds are available and improvements are rebuilt, there could be a lengthy period in which assessed values within the District would be adversely affected. Specific Flood Type Risks Ponding (or Pluvial) Flood: Ponding, or pluvial, flooding occurs when heavy rainfall creates a flood event independent of an overflowing water body, typically in relatively flat areas. Intense rainfall can exceed the drainage capacity of a drainage system, which may result in water within the drainage system becoming trapped and diverted onto streets and nearby property until it is able to reach a natural outlet. Ponding can also occur in a flood pool upstream or behind a dam, levee or reservoir. Riverine (or Fluvial) Flood: Riverine, or fluvial, flooding occurs when water levels rise over the top of river, bayou or channel banks due to excessive rain from tropical systems making landfall and/or persistent thunderstorms over the same area for extended periods of time. The damage from a riverine flood can be widespread. The overflow can affect smaller rivers and streams downstream or may sheet-flow over land. Flash flooding is a type of riverine flood that is characterized by an intense, high velocity torrent of water that occurs in an existing river channel with little to no notice. Flash flooding can also occur even if no rain has fallen, for instance, after a levee, dam or reservoir has failed or experienced an uncontrolled release, or after a sudden release of water by a debris or ice jam. In addition, planned or unplanned controlled releases from a dam, levee or reservoir also may result in flooding in areas adjacent to rivers, bayous or drainage systems downstream. Coastal (or Storm Surge) Flood: Coastal, or storm surge, flooding occurs when sea levels or water levels in estuarial rivers, bayous and channels rise to abnormal levels in coastal areas, over and above the regular astronomical tide, caused by forces generated from a severe storm’s wind, waves, and low atmospheric pressure. Storm surge is extremely dangerous, because it is capable of flooding large swaths of coastal property and causing catastrophic destruction. This type of flooding may be exacerbated when storm surge coincides with a normal high tide.

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Economic Factors and Interest Rates A substantial percentage of the taxable value of the District results from the current market value of commercial, industrial, warehouses and personal property located therein. The market value of such properties is related to general economic conditions affecting the demand for properties. Demand for commercial and industrial properties of this type and the construction of structures thereon can be significantly affected by factors such as interest rates, credit availability, construction costs, energy availability and the prosperity and demographic characteristics of the urban center toward which the marketing of such properties is directed. Decreased levels of construction activity would tend to restrict the growth of property values in the District or could adversely impact such values. Credit Markets and Liquidity in the Financial Markets Interest rates and the availability of mortgage and development funding have a direct impact on the construction activity, particularly short-term interest rates, at which developers are able to obtain financing for development costs. Interest rate levels may affect the ability of a landowner with undeveloped property to undertake and complete construction activities within the District. Because of the numerous and changing factors affecting the availability of funds, particularly liquidity in the national credit markets, the District is unable to assess the future availability of such funds for continued construction within the District. In addition, since the District is located approximately 21 miles from the central downtown business district of Houston, the success of development within the District and growth of District taxable property values are, to a great extent, a function of the Houston metropolitan and regional economies and national credit and financial markets. A downturn in the economic conditions of Houston and a decline in the nation’s real estate and financial markets could adversely affect development plans in the District and restrain the growth of or reduce the District’s property tax base. Dependence on Major Taxpayers Based upon the 2019 certified tax rolls, the top ten taxpayers are responsible for approximately 91.16% ($39,650,310) of the District’s 2019 taxes. Sprint Safety, a subsidiary of Sprint Industrial which is a subsidiary of Republic Services, Inc., is the largest taxpayer within the District. Sprint Safety, which represents approximately 19.24% ($8,370,199) of the certified portion of the District’s 2019 Taxable Assessed Valuation, owns a portion of the personal property in the Tidal Tank Facility. The second largest taxpayer is Vigavi Realty LLC, which represents approximately 14.77% ($6,424,706) of the certified portion of the District’s 2019 Taxable Assessed Value, consisting of the approximately 33,000 square foot warehouse/distribution Tidal Tank Facility. The fourth largest taxpayer is Tidal Tank, which represents approximately 10.42% ($4,534,096) of the certified portion of the District’s 2019 Taxable Assessed Value, consisting of a portion of the personal property in the Tidal Tank Facility. In the aggregate, the value of the property owned by these three taxpayers is $19,329,001 or approximately 44.44% of the District’s 2019 Taxable Assessed Value. The Tidal Tank Facility opened in 2016 and provides specialized industrial equipment (liquid and solid storage tanks) for the energy, industrial and environmental sectors. The third largest taxpayer is Sealy IDV Thompson 10, LLC, which represents approximately 11.28% ($4,908,620) of the certified portion of the District’s 2019 Taxable Assessed Value, consisting of the approximately 390,000 square foot Investment & Development Ventures Facility, of which approximately 130,000 square feet has been leased to a cotton distribution company. The fifth largest taxpayer is Tuffi Company, Inc., which represents approximately 10.19% ($4,433,640) of the certified portion of the District’s 2019 Taxable Assessed Value, consisting of the approximately 33,000 square foot B&G Crane Service Facility. The seventh largest taxpayer is B&G Crane Services, LLC, which represents 5.04% ($2,193,734) of the certified portion of the District’s 2019 Taxable Assessed Value, consisting of the personal property in the B&G Crane Service Facility. B&G Crane Service, LLC is a subsidiary of Maxim Crane Works, L.P. In aggregate, the value of the property owned by these two taxpayers is $6,627,374 or approximately 15.24% of the District’s 2019 Taxable Assessed Value. The B&G Crane Service Facility opened in 2015, and B&G provides crane rental and lifting services. The sixth largest taxpayer is TTBP Investments LLC, which represents approximately 7.12% ($3,095,547) of the certified portion of the District’s 2019 Taxable Assessed Value, consisting of the approximately 25,000 square foot Evergreen Tank Facility. Evergreen Tank is a subsidiary of Mobile Mini Solutions and is a supplier of a large variety of storage tanks and trucks. The Evergreen Tank Facility opened in 2018. See “THE DISTRICT—Status of Development,” “TAX DATA—Principal Taxpayers,” and “RISK FACTORS—Dependence on Personal Property Tax Collections.” Certain of the District’s principal taxpayers own warehouse and distribution facilities that may not be readily sold, re-leased or re-purposed should the businesses located in such facilities cease operations in the District. The ability of any principal taxpayer to make full and timely payments of taxes levied against its property by the District and similar taxing authorities will directly affect the District's ability to meet its debt service obligations. If, for any reason, any one or more principal taxpayers do not pay taxes due or do not pay in a timely manner, the District may need to levy a higher tax rate or use other funds available for debt service purposes. However, the District has not covenanted in the Bond Resolution, nor is it required by Texas law, to maintain any particular balance in its Debt Service Fund or any other funds to allow for any such delinquencies. Therefore, failure by one or more principal taxpayers to pay their taxes on a timely basis could have a material adverse effect upon the District's ability to pay debt service on the Bonds on a current basis.

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Dependence on Personal Property Tax Collections Approximately 41.68% ($18,131,130) of the District’s certified portion of the 2019 Taxable Assessed Valuation ($43,497,567) is personal property. See “TAX DATA—Tax Roll Information.” Most other utility districts in Texas are not dependent to such an extent on taxes levied on personal property, and personal property taxation and collection create special risks for Registered Owners. See “TAX DATA—Principal Taxpayers,” “—Summary of Assessed Valuation,” “TAX PROCEDURES.” Unlike real property, there is no certainty that personal property will remain in the District from year to year. Automobiles and other personal property are portable and could be removed from the District at any time. Personal property removed from the District as of January 1 of any year is not subject to taxation by the District for that year. If personal property is subject to a lien for unpaid District taxes for any year, the District lien is lost if the property is sold in the ordinary course of business. A lien in the amount of the personal property taxes owed by a taxpayer attaches not only to personal property owned by the taxpayer as of January 1 with a tax situs in the District, but to any personal property then or thereafter owned by the taxpayer. However, the District may not be able to foreclose on personal property located outside the State of Texas and locating and foreclosing on property held outside the District may be costly, inefficient and difficult. The statute of limitations for collection of personal property taxes is four years from the date of delinquency, as contrasted with the 20-year statute of limitations for real property. Personal property may not be seized, and a suit may not be filed to collect delinquent personal property taxes if the tax has been delinquent for more than four years. A tax and any penalty and interest on the tax that is delinquent longer than the limitation period is presumed paid unless a suit to collect such personal property tax is pending. As with real property taxes, ad valorem taxes levied on personal property are the personal obligation of the taxpayer. See “TAX PROCEDURES.” Heretofore the District has been successful in collecting its ad valorem tax levies including ad valorem taxes levied on personal property located in the District. However, no representation can be made by the District regarding future tax collections. See “TAX DATA—Historical Tax Collections.” Operating Funds At this stage of development, the District does not generate adequate operating revenue to pay the operating expenses of the District. The District levied a 2019 maintenance tax of $0.80 per $100 of assessed valuation. When the District levies its debt service tax in 2020, the District expects to reduce its maintenance tax and the revenue produced from the maintenance tax may not be sufficient to offset the operating expenses of the District. The District’s General Fund balance as of August 12, 2020 was $233,757. Continued maintenance of a positive General Fund balance will depend upon continued development and increased amounts of maintenance tax revenue and tap fees. See “GENERAL FUND.” Overlapping City of Baytown Tax Rate According to the City’s tax office, the City set a total tax rate of $0.80203 for the 2019 tax year. The District’s 2019 tax rate of $0.80 per $100 of assessed valuation plus the overlapping tax rate of the City ($0.80203) totals $1.60203; such combined tax rate of the City and the District is slightly higher than the tax rate that is common among many other similar utility districts providing water, sanitary sewer, and storm drainage services in the Harris County area. However, the property owners of the District also receive additional services from the City that are not provided to property owners of utility districts located in the unincorporated areas of the county. An increase in the District’s tax rate or the City’s tax rate substantially above the current level could have an adverse impact on future development in the District and on the District’s ability to collect such tax. The District has no control over the City of Baytown’s tax rate as in effect from time to time and can make no assurances that any particular rate will be maintained by it or by the City of Baytown. Impact on District Tax Rate Assuming no further development, the value of the land and improvements currently within the District will be the major determinant of the ability or willingness of District property owners to pay their taxes. The 2020 Preliminary Taxable Assessed Valuation of the District (see “FINANCIAL STATEMENT”) is $70,495,190. After issuance of the Bonds, the maximum annual debt service requirement will be $405,600 (2030) and the average annual debt service requirement will be $402,421 (2022-2045). Assuming no increase or decrease from the 2020 Preliminary Taxable Assessed Valuation and no use of funds other than tax collections, a tax rate of $0.64 per $100 assessed valuation at a 90% collection rate would be necessary to pay the maximum annual debt service requirement of $405,600 and a tax rate of $0.64 per $100 assessed valuation at a 90% collection rate would be necessary to pay the average annual debt service requirement of $402,421. See “DEBT SERVICE REQUIREMENTS.” The Estimated Taxable Assessed Valuation as of June 1, 2020 within the District is $75,736,751. Assuming no increase or decrease from the Estimated Taxable Assessed Valuation as of June 1, 2020 and no use of funds other than tax collections, tax rates of $0.60 and $0.60 per $100 assessed valuation would be necessary to pay the maximum annual requirement and average annual requirement, respectively. Although calculations have been made regarding average and maximum tax rates necessary to pay the debt service on the Bonds based upon the 2020 Preliminary Taxable Assessed Valuation and the Estimated Taxable Assessed Valuation as of June 1, 2020, the District can

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make no representations regarding the future level of assessed valuation within the District. Increases in the tax rate may be required in the event the District’s assessed valuation does not continue to increase or in the event major taxpayers do not pay their District taxes timely. Increases in taxable values depend primarily on the continuing construction of other taxable improvements within the District. See “TAX PROCEDURES” and “TAX DATA—Tax Adequacy for Debt Service.” Future Debt The District reserves in the Bond Resolution the right to issue the remaining $27,685,000 principal amount of authorized and unissued unlimited tax bonds for the purpose of acquiring or constructing water, sanitary sewer and drainage facilities and refunding of such bonds. The District may also issue the $14,700,000 principal amount of authorized and unissued unlimited tax bonds for the purpose of constructing roads and related improvements and refunding of such bonds remaining after the issuance of the Bonds. The District may issue additional bonds approved by District voters in future elections. The District anticipates selling additional bonds in the future. See “THE BONDS—Issuance of Additional Debt” and “THE WATER SUPPLY AND WASTEWATER TREATMENT SYSTEM.” The issuance of such obligations may adversely affect the investment security of the Bonds. The District does not employ any formula with regard to assessed valuations or tax collections or otherwise to limit the amount of bonds which may be issued. Any bonds issued by the District, however, must be approved by the Attorney General of Texas and the Board of Directors of the District and any bonds issued to acquire or construct water, sanitary sewer and drainage facilities, but not road facilities, must be approved by the Commission. Landowner Obligation to the District

There are no commitments from or obligations of the Developer or any landowner to the District to proceed at any particular rate or according to any specified plan with the development of land or the construction of improvements in the District, and there is no restriction on any landowner’s right to sell its land. Failure to construct taxable improvements on developed tracts of land or developed lots would restrict the rate of growth of taxable values in the District. The District cannot and does not make any representations that over the life of the Bonds the District will increase or maintain its taxable value. Tax Collection Limitations The District’s ability to make debt service payments may be adversely affected by its inability to collect ad valorem taxes. Under Texas law, the levy of ad valorem taxes by the District constitutes a lien in favor of the District on a parity with the liens of all other state and local taxing authorities on the property against which taxes are levied, and such lien may be enforced by foreclosure. The District’s ability to collect ad valorem taxes through such foreclosure may be impaired by market conditions limiting the proceeds from a foreclosure sale of taxable property and collection procedures. While the District has a lien on taxable property within the District for taxes levied against such property, such lien can be foreclosed only in a judicial proceeding. The costs of collecting any such taxpayer’s delinquencies could substantially reduce the net proceeds to the District from a tax foreclosure sale. Finally, a bankruptcy court with jurisdiction over bankruptcy proceedings initiated by or against a taxpayer within the District pursuant to the Federal Bankruptcy Code could stay any attempt by the District to collect delinquent ad valorem taxes against such taxpayer. In addition to the automatic stay against collection of delinquent taxes afforded a taxpayer during the pendency of a bankruptcy, a bankruptcy could affect payment of taxes in two other ways: first, a debtor’s confirmation plan may allow a debtor to make installment payments on delinquent taxes for up to six years; and, second, a debtor may challenge, and a bankruptcy court may reduce, the amount of any taxes assessed against the debtor, including taxes that have already been paid. See “TAX PROCEDURES—District’s Rights in the Event of Tax Delinquencies.” Registered Owners’ Remedies and Bankruptcy Limitations If the District defaults in the payment of principal, interest , or redemption price on the Bonds when due, if it fails to make payments into any fund or funds created in the Bond Resolution, or if it defaults in the observation or performance of any other covenants, conditions, or obligations set forth in the Bond Resolution , the Registered Owners have the statutory right of a writ of mandamus issued by a court of competent jurisdiction requiring the District and its officials to observe and perform the covenants, obligations, or conditions prescribed in the Bond Resolution. Except for mandamus, the Bond Resolution does not specifically provide for remedies to protect and enforce the interests of the Registered Owners. There is no acceleration of maturity of the Bonds in the event of default, and, consequently, the remedy of mandamus may have to be relied upon from year to year. Further, there is no trust indenture or trustee, and all legal actions to enforce such remedies would have to be undertaken at the initiative of, and be financed by, the Registered Owners. Statutory language authorizing local governments such as the District to sue and be sued does not waive the local government’s sovereign immunity from suits for money damages, so that in the absence of other waivers of such immunity by the Texas Legislature, a default by the District in its covenants in the Bond Resolution may not be reduced to a judgment for money damages. If such a judgment against the District were obtained, it could not be enforced by direct levy and execution against the District’s property. Further, the Registered Owners cannot themselves foreclose on property within the District or sell property within the District to enforce the tax lien on taxable property to pay the principal of and interest on the Bonds. The enforceability of the rights and remedies of the Registered Owners may further be limited by a State of Texas statute reasonably required to attain an important public purpose or by laws relating to bankruptcy, reorganization or other similar laws of general application affecting the rights of creditors of political subdivisions, such as the District.

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Subject to the requirements of Texas law discussed below, a political subdivision such as the District may voluntarily file a petition for relief from creditors under Chapter 9 of the Federal Bankruptcy Code, 11 U.S.C. Sections 901-946. The filing of such petition would automatically stay the enforcement of Registered Owner’s remedies, including mandamus. The automatic stay would remain in effect until the federal bankruptcy judge hearing the case dismisses the petition, enters an order granting relief from the stay, or otherwise allows creditors to proceed against the petitioning political subdivision. A political subdivision such as the District may qualify as a debtor eligible to proceed in a Chapter 9 case only if it is (1) authorized to file for federal bankruptcy protection by applicable state law, (2) is insolvent or unable to meet its debts as they mature, (3) desires to effect a plan to adjust such debts, and (4) has either obtained the agreement of or negotiated in good faith with its creditors or is unable to negotiate with its creditors because negotiation is impracticable. Special districts such as the District must obtain the approval of the TCEQ as a condition to seeking relief under the Federal Bankruptcy Code. The TCEQ is required to investigate the financial condition of a financially troubled district and authorize such district to proceed under federal bankruptcy law only if such district has fully exercised its rights and powers under Texas law and remains unable to meet its debts and other obligations as they mature. If a petitioning district were allowed to proceed voluntarily under Chapter 9 of the Federal Bankruptcy Code, it could file a plan for an adjustment of its debts. If such a plan were confirmed by the bankruptcy court, it could, among other things, affect Registered Owners by reducing or eliminating the amount of indebtedness, deferring or rearranging the debt service schedule, reducing or eliminating the interest rate, modifying or abrogating the collateral or security arrangements, substituting (in whole or in part) other securities, and otherwise compromising and modifying the rights and remedies of the Registered Owners’ claims against a district. A district may not be forced into bankruptcy involuntarily. Environmental Regulations Wastewater treatment, water supply, storm sewer facilities and construction activities within the District are subject to complex environmental laws and regulations at the federal, state and local levels that may require or prohibit certain activities that affect the environment, such as:

Requiring permits for construction and operation of water wells, wastewater treatment and other facilities; Restricting the manner in which wastes are treated and released into the air, water and soils; Restricting or regulating the use of wetlands or other properties; or Requiring remedial action to prevent or mitigate pollution.

Sanctions against a municipal utility district or other type of special purpose district for failure to comply with environmental laws and regulations may include a variety of civil and criminal enforcement measures, including assessment of monetary penalties, imposition of remedial requirements and issuance of injunctions to ensure future compliance. Environmental laws and compliance with environmental laws and regulations can increase the cost of planning, designing, constructing and operating water production and wastewater treatment facilities. Environmental laws can also inhibit growth and development within the District. Further, changes in regulations occur frequently, and any changes that result in more stringent and costly requirements could materially impact the District. Air Quality Issues. Air quality control measures required by the United States Environmental Protection Agency (the “EPA”) and the Texas Commission on Environmental Quality (the “TCEQ”) may impact new industrial, commercial and residential development in the Houston area. Under the Clean Air Act (“CAA”) Amendments of 1990, the eight-county Houston-Galveston-Brazoria area (“HGB Area”)—Harris, Galveston, Brazoria, Chambers, Fort Bend, Waller, Montgomery and Liberty Counties—has been designated a nonattainment area under three separate federal ozone standards: the one-hour (124 parts per billion (“ppb”)) and eight-hour (84 ppb) standards promulgated by the EPA in 1997 (the “1997 Ozone Standards”); the tighter, eight-hour ozone standard of 75 ppb promulgated by the EPA in 2008 (the “2008 Ozone Standard”), and the EPA’s most-recent promulgation of an even lower, 70 ppb eight-hour ozone standard in 2015 (the “2015 Ozone Standard”). While the State of Texas has been able to demonstrate steady progress and improvements in air quality in the HGB Area, the HGB Area remains subject to CAA nonattainment requirements. The HGB Area is currently designated as a severe ozone nonattainment area under the 1997 Ozone Standards. While the EPA has revoked the 1997 Ozone Standards, the EPA historically has not formally redesignated nonattainment areas for a revoked standard. As a result, the HGB Area remained subject to continuing severe nonattainment area “anti-backsliding” requirements, despite the fact that HGB Area air quality has been attaining the 1997 Ozone Standards since 2014. In late 2015, the EPA approved the TCEQ’s “redesignation substitute” for the HGB Area under the revoked 1997 Ozone Standards, leaving the HGB Area subject only to the nonattainment area requirements under the 2008 Ozone Standard (and later, the 2015 Ozone Standard). In February 2018, the U.S. Court of Appeals for the District of Columbia Circuit issued an opinion in South Coast Air Quality Management District v. EPA, 882 F.3d 1138 (D.C. Cir. 2018) vacating the EPA redesignation substitute rule that provided the basis for the EPA’s decision to eliminate the anti-backsliding requirements that had applied in the HGB Area under the 1997 Ozone Standard. The court has not responded to the EPA’s April 2018 request for rehearing of the case. To address the uncertainty created

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by the South Coast court’s ruling, the TCEQ has developed a formal request that the HGB Area be redesignated to attainment under the 1997 Ozone Standards. The TCEQ Commissioners approved publication of a proposed HGB Area redesignation request under the 1997 Ozone Standards on September 5, 2018. The HGB Area is currently designated as a “moderate” nonattainment area under the 2008 Ozone Standard, with an attainment deadline of July 20, 2018. If the EPA ultimately determines that the HGB Area has failed to meet the attainment deadline based on the relevant data, the area is subject to reclassification to a nonattainment classification that provides for more stringent controls on emissions from the industrial sector. In addition, the EPA may impose a moratorium on the awarding of federal highway construction grants and other federal grants for certain public works construction projects if it finds that an area fails to demonstrate progress in reducing ozone levels. The HGB Area is currently designated as a “marginal” nonattainment area under the 2015 Ozone Standard, with an attainment deadline of August 3, 2021. For purposes of the 2015 Ozone Standard, the HGB Area consists of only six counties: Brazoria, Chambers, Fort Bend, Galveston, Harris, and Montgomery Counties. In order to demonstrate progress toward attainment of the EPA’s ozone standards, the TCEQ has established a state implementation plan (“SIP”) for the HGB Area setting emission control requirements, some of which regulate the inspection and use of automobiles. These types of measures could impact how people travel, what distances people are willing to travel, where people choose to live and work, and what jobs are available in the HGB Area. These SIP requirements can negatively impact business due to the additional permitting/regulatory constraints that accompany this designation and because of the community stigma associated with a nonattainment designation. It is possible that additional controls will be necessary to allow the HGB Area to reach attainment with the ozone standards by the EPA’s attainment deadlines. These additional controls could have a negative impact on the HGB Area’s economic growth and development. Water Supply & Discharge Issues. Water supply and discharge regulations that municipal utility districts, including the District, may be required to comply with involve: (1) groundwater well permitting and surface water appropriation; (2) public water supply systems; (3) wastewater discharges from treatment facilities; (4) storm water discharges; and (5) wetlands dredge and fill activities. Each of these is addressed below: Certain governmental entities regulate groundwater usage in the HGB Area. A municipal utility district or other type of special purpose district that (i) is located within the boundaries of such an entity that regulates groundwater usage, and (ii) relies on local groundwater as a source of water supply, may be subject to requirements and restrictions on the drilling of water wells and/or the production of groundwater that could affect both the engineering and economic feasibility of district water supply projects. Pursuant to the federal Safe Drinking Water Act (“SDWA”) and the EPA’s National Primary Drinking Water Regulations (“NPDWRs”), which are implemented by the TCEQ’s Water Supply Division, a municipal utility district’s provision of water for human consumption is subject to extensive regulation as a public water system. Municipal utility districts must generally provide treated water that meets the primary and secondary drinking water quality standards adopted by the TCEQ, the applicable disinfectant residual and inactivation standards, and the other regulatory action levels established under the agency’s rules. The EPA has established NPDWRs for more than ninety (90) contaminants and has identified and listed other contaminants which may require national drinking water regulation in the future. Texas Pollutant Discharge Elimination System (“TPDES”) permits set limits on the type and quantity of discharge, in accordance with state and federal laws and regulations. The TCEQ reissued the TPDES Construction General Permit (TXR150000), with an effective date of March 5, 2018, which is a general permit authorizing the discharge of stormwater runoff associated with small and large construction sites and certain nonstormwater discharges into surface water in the state. It has a 5-year permit term and is then subject to renewal. Moreover, the Clean Water Act (“CWA”) and Texas Water Code require municipal wastewater treatment plants to meet secondary treatment effluent limitations and more stringent water quality-based limitations and requirements to comply with the Texas water quality standards. Any water quality-based limitations and requirements with which a municipal utility district must comply may have an impact on the municipal utility district’s ability to obtain and maintain compliance with TPDES permits. The District is subject to the TCEQ’s General Permit for Phase II (Small) Municipal Separate Storm Sewer Systems (the “MS4 Permit”), which was issued by the TCEQ on January 24, 2019. The MS4 Permit authorizes the discharge of stormwater to surface water in the state from small municipal separate storm sewer systems. The District has applied for coverage under the MS4 Permit and is awaiting final approval from the TCEQ. In order to maintain compliance with the MS4 Permit, the District continues to develop, implement, and maintain the required plans, as well as to install or implement best management practices to minimize or eliminate unauthorized pollutants that may otherwise be found in stormwater runoff. Costs associated with these compliance activities could be substantial in the future. Operations of utility districts, including the District, are also potentially subject to requirements and restrictions under the CWA regarding the use and alteration of wetland areas that are within the “waters of the United States.” The District must obtain a permit from the United States Army Corps of Engineers (“USACE”) if operations of the District require that wetlands be filled, dredged, or otherwise altered.

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In 2015, the EPA and USACE promulgated a rule known as the Clean Water Rule (“CWR”) aimed at redefining “waters of the United States” over which the EPA and USACE have jurisdiction under the CWA. The CWR significantly expanded the scope of the federal government’s CWA jurisdiction over intrastate water bodies and wetlands. The CWR was challenged in numerous jurisdictions, including the Southern District of Texas, causing significant uncertainty regarding the ultimate scope of “waters of the United States” and the extent of EPA and USACE jurisdiction. On September 12, 2019, the EPA and USACE finalized a rule repealing the CWR, thus reinstating the regulatory text that existed prior to the adoption of the CWR. This repeal officially became final on December 23, 2019, but the repeal has itself become the subject of litigation in multiple jurisdictions. On January 23, 2020, the EPA and USACE released the Navigable Waters Protection Rule (“NWPR”), which contains a new definition of “waters of the United States.” The stated purpose of the NWPR is to restore and maintain the integrity of the nation’s waters by maintaining federal authority over the waters Congress has determined should be regulated by the federal government, while preserving the states’ primary authority over land and water resources. The new definition outlines four categories of waters that are considered “waters of the United States,” and thus federally regulated under the CWA: (i) territorial seas and traditional navigable waters; (ii) perennial and intermittent tributaries to territorial seas and traditional navigable waters; (iii) certain lakes, ponds, and impoundments of jurisdictional waters; and (iv) wetlands adjacent to jurisdictional waters. The new rule also identifies certain specific categories that are not “waters of the United States,” and therefore not federally regulated under the CWA: (a) groundwater; (b) ephemeral features that flow only in direct response to precipitation; (c) diffuse stormwater runoff and directional sheet flow over upland; (d) certain ditches; (e) prior converted cropland; (f) certain artificially irrigated areas; (g) certain artificial lakes and ponds; (h) certain water-filled depressions and certain pits; (i) certain stormwater control features; (j) certain groundwater recharge, water reuse, and wastewater recycling structures; and (k) waste treatment systems. The NWPR became effective on June 22, 2020 and is currently the subject of ongoing litigation. Due to ongoing rulemaking activity, as well as existing and possible future litigation, there remains uncertainty regarding the ultimate scope of “waters of the United States” and the extent of EPA and USACE jurisdiction. Depending on the final outcome of such proceedings, operations of municipal utility districts, including the District, could potentially be subject to additional restrictions and requirements, including additional permitting requirements. Continuing Compliance with Certain Covenants The Bond Resolution contains covenants by the District intended to preserve the exclusion from gross income for federal income tax purposes of interest on the Bonds. Failure by the District to comply with such covenants in the Bond Resolution on a continuous basis prior to maturity of the Bonds could result in interest on the Bonds becoming taxable retroactively to the date of original issuance. See “TAX MATTERS.” Marketability The District has no agreement with the Underwriter regarding the reoffering yields or prices of the Bonds and has no control over trading of the Bonds in the secondary market. Moreover, there is no assurance that a secondary market will be made in the Bonds. If there is a secondary market, the difference between the bid and asked price of the Bonds may be greater than the difference between the bid and asked price of bonds of comparable maturity and quality issued by more traditional issuers as such bonds are generally bought, sold or traded in the secondary market. Changes in Tax Legislation Certain tax legislation, whether currently proposed or proposed in the future, may directly or indirectly reduce or eliminate the benefit of the exclusion of interest on the Bonds from gross income for federal tax purposes. Any proposed legislation, whether or not enacted, may also affect the value and liquidity of the Bonds. Prospective purchasers should consult with their own tax advisors with respect to any proposed, pending or future legislation.

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THE BONDS General Following is a description of some of the terms and conditions of the Bonds, which description is qualified in its entirety by reference to the Bond Resolution of the Board authorizing the issuance and sale of the Bonds. The Bond Resolution authorizes the issuance and sale of the Bonds and prescribes the terms, conditions, and provisions for the payment of the principal of and interest on the Bonds by the District. The Bonds will be dated and accrue interest from October 1, 2020 and are payable on each April 1 and October 1 commencing April 1, 2021 (six months of interest), until the earlier of maturity or prior redemption. The Bonds mature on October 1 in the principal amounts and in each of the years and accrue interest at the rates shown on the cover page of this OFFICIAL STATEMENT. Interest calculations are based on a 360-day year comprised of twelve 30-day months. The Bonds will be issued only in fully registered form in $5,000 denominations or integral multiples thereof. Authority for Issuance On May 4, 2019, the voters of the District authorized the issuance of a total of $33,900,000 principal amount of unlimited tax bonds for the purpose of acquiring or constructing water, sanitary sewer and drainage facilities and refunding of such bonds. The Bonds are the first issuance from such authorization. See “Issuance of Additional Debt” herein. Before the Bonds can be issued, the Attorney General of Texas must pass upon the legality of certain related matters. The Attorney General of Texas does not guarantee or pass upon the safety of the Bonds as an investment or upon the adequacy of the information contained in this OFFICIAL STATEMENT. The Bonds are issued by the District pursuant to the terms and provisions of the Bond Resolution, an Order of the TCEQ, Article XVI, Section 59 of the Texas Constitution, and Chapters 49 and 54 of the Texas Water Code, as amended. Source of and Security for Payment While the Bonds or any part of the principal thereof or interest thereon remain outstanding and unpaid, the District covenants in the Bond Resolution to levy a continuing, direct, annual ad valorem tax, without legal limit as to rate or amount, upon all taxable property in the District sufficient to pay the principal of and interest on the Bonds, with full allowance being made for delinquencies and costs of collection. The Bonds are obligations of the District and are not the obligations of the State of Texas, Harris County, the City of Baytown or any entity other than the District. Method of Payment of Principal and Interest In the Bond Resolution, the Board has appointed The Bank of New York Mellon Trust Company NA, Dallas, Texas as the initial Paying Agent/Registrar for the Bonds. The principal of the Bonds shall be payable, without exchange or collection charges, in any coin or currency of the United States of America, which, on the date of payment, is legal tender for the payment of debts due the United States of America. In the event the book-entry system is discontinued, principal of the Bonds shall be payable upon presentation and surrender of the Bonds as they respectively become due and payable, at the principal payment office of the Paying Agent/Registrar in Dallas, Texas and interest on each Bond shall be payable by check payable on each Interest Payment Date, mailed by the Paying Agent/Registrar on or before each Interest Payment Date to the Registered Owner of record as of the close of business on March 15 or September 15 immediately preceding each Interest Payment Date (defined herein as the “Record Date”), to the address of such Registered Owner as shown on the Paying Agent/Registrar’s records (the “Register”) or by such other customary banking arrangements as may be agreed upon by the Paying Agent/Registrar and the Registered Owners at the risk and expense of the Registered Owners. If the date for payment of the principal of or interest on any Bond is not a business day, then the date for such payment shall be the next succeeding business day, as defined in the Bond Resolution. Funds In the Bond Resolution, the Debt Service Fund is created, and the proceeds from all taxes levied, assessed and collected for and on account of the Bonds authorized by the Bond Resolution shall be deposited, as collected, in such fund.

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Twelve (12) months of capitalized interest and accrued interest on the Bonds shall be deposited into the Debt Service Fund upon receipt. The remaining proceeds from sale of the Bonds, including interest earnings thereon, shall be deposited into the Capital Projects Fund, to pay the costs of acquiring or paying for District water, sanitary sewer and drainage facilities and related improvements, and for paying the costs of issuing the Bonds. See “USE AND DISTRIBUTION OF BOND PROCEEDS” for a more complete description of the use of Bond proceeds. No Arbitrage The District will certify as of the date the Bonds are delivered and paid for that, based upon all facts and estimates then known or reasonably expected to be in existence on the date the Bonds are delivered and paid for, the District reasonably expects that the proceeds of the Bonds will not be used in a manner that would cause the Bonds, or any portion of the Bonds, to be “arbitrage bonds” under the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations prescribed thereunder. Furthermore, all officers, employees, and agents of the District have been authorized and directed to provide certifications of facts and estimates that are material to the reasonable expectations of the District as of the date the Bonds are delivered and paid for. In particular, all or any officers of the District are authorized to certify to the facts and circumstances and reasonable expectations of the District on the date the Bonds are delivered and paid for regarding the amount and use of the proceeds of the Bonds. Moreover, the District covenants in the Bond Resolution that it shall make such use of the proceeds of the Bonds, regulate investment of proceeds of the Bonds, and take such other and further actions and follow such procedures, including, without limitation, calculating the yield on the Bonds, as may be required so that the Bonds shall not become “arbitrage bonds” under the Code and the regulations prescribed from time to time thereunder.

Record Date

The record date for payment of the interest on any regularly scheduled interest payment date is defined as the 15th day of the month (whether or not a business day) preceding such interest payment date. Redemption Provisions The District reserves the right, at its option, to redeem the Bonds maturing on or after October 1, 2026, prior to their scheduled maturities, in whole or in part, in integral multiples of $5,000, on October 1, 2025, or on any date thereafter, at a price of par plus accrued interest on the principal amounts called for redemption to the date fixed for redemption. If fewer than all of the Bonds are redeemed at any time, the particular maturities of Bonds to be redeemed shall be selected by the District. If less than all the Bonds of any maturity are redeemed at any time, the particular Bonds within a maturity to be redeemed shall be selected by the Paying Agent/Registrar by lot or other customary method of selection (or by DTC in accordance with its procedures while the Bonds are in book-entry-only form). Notice of any redemption identifying the Bonds to be redeemed in whole or in part shall be given by the Paying Agent/Registrar at least thirty (30) days prior to the date fixed for redemption by sending written notice by first class mail to the Registered Owner of each Bond to be redeemed in whole or in part at the address shown on the register. Such notices shall state the redemption date, the redemption price, the place at which the Bonds are to be surrendered for payment and, if fewer than all the Bonds outstanding within any one maturity are to be redeemed, the numbers of the Bonds or the portions thereof to be redeemed. Any notice given shall be conclusively presumed to have been duly given, whether or not the Registered Owner receives such notice. By the date fixed for redemption, due provision shall be made with the Paying Agent/Registrar for payment of the redemption price of the Bonds or portions thereof to be redeemed, plus accrued interest to the date fixed for redemption. When Bonds have been called for redemption in whole or in part and due provision has been made to redeem the same as herein provided, the Bonds or portions thereof so redeemed shall no longer be regarded as outstanding except for the purpose of receiving payment solely from the funds so provided for redemption, and the rights of the Registered Owners to collect interest that would otherwise accrue after the redemption date on any Bond or portion thereof called for redemption shall terminate on the date fixed for redemption. Registration and Transfer So long as any Bonds remain outstanding, the Paying Agent/Registrar shall keep the register at its principal payment office and, subject to such reasonable regulations as it may prescribe, the Paying Agent/Registrar shall provide for the registration and transfer of Bonds in accordance with the terms of the Bond Resolution. While the Bonds are in the Book-Entry-Only System, the Bonds will be registered in the name of Cede & Co. and will not be transferred. See “BOOK-ENTRY-ONLY SYSTEM.” Replacement of Paying Agent/Registrar Provision is made in the Bond Resolution for replacement of the Paying Agent/Registrar. If the Paying Agent/Registrar is replaced by the District, the new paying agent/registrar shall act in the same capacity as the previous Paying Agent/Registrar. Any paying agent/registrar selected by the District shall be a national or state banking institution, a corporation organized and doing business under the laws of the United States of America or of any State, authorized under such laws to exercise trust powers, and subject to supervision or examination by federal or state authority, to act as Paying Agent/Registrar for the Bonds.

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Lost, Stolen or Destroyed Bonds In the event the Book-Entry-Only System is discontinued, upon the presentation and surrender to the Paying Agent/Registrar of a mutilated Bond, the Paying Agent/Registrar shall authenticate and deliver in exchange therefor a replacement Bond of like maturity, interest rate and principal amount, bearing a number not contemporaneously outstanding. If any Bond is lost, stolen or destroyed, the District, pursuant to the applicable laws of the State of Texas and in the absence of notice or knowledge that such Bond has been acquired by a bona fide purchaser, shall, upon receipt of certain documentation from the Registered Owner and an indemnity bond, execute and the Paying Agent/Registrar shall authenticate and deliver a replacement Bond of like maturity, interest rate and principal amount bearing a number not contemporaneously outstanding. Registered Owners of lost, stolen or destroyed bonds will be required to pay the District’s costs to replace such bond. In addition, the District or the Paying Agent/Registrar may require the Registered Owner to pay a sum sufficient to cover any tax or other governmental charge that may be imposed. Issuance of Additional Debt After issuance of the Bonds, the District will have $27,685,000 principal amount in authorized but unissued unlimited tax bonds authorized but unissued for the purpose of acquiring or constructing water, sanitary sewer and drainage facilities and refunding such bonds. The voters of the District have also authorized the issuance of $14,700,000 principal amount of unlimited tax bonds for the purpose of constructing roads and related improvements and refunding such bonds, all of which are authorized but unissued. The Bond Resolution imposes no limitation on the amount of additional parity bonds which may be authorized for issuance by the District’s voters or the amount ultimately issued by the District. Issuance of additional bonds could dilute the investment security for the Bonds. Dissolution of the District

Under Texas law, the District may be dissolved by the City of Baytown without the District’s consent. However, pursuant to an agreement with the District, the City may not dissolve the District until the Facilities that serve the District are complete and certain obligations are met. See “THE DISTRICT—Utility Functions and Services Allocation Agreement with the City of Baytown.” If the District is dissolved, the City of Baytown will assume the District’s assets and obligations (including the Bonds) and dissolve the District within ninety (90) days thereafter. Prior to dissolution by the City of Baytown, the District shall have the opportunity to discharge any obligations of the District by selling its bonds or by causing the City of Baytown to sell bonds of the City of Baytown in an amount necessary to discharge such obligations. Dissolution of the District by the City of Baytown is a policymaking matter within the discretion of the Mayor and the City Council of the City of Baytown. Moreover, no representation is made concerning the ability of the City of Baytown to make debt service payments should dissolution occur. See “Remedies in Event of Default” below. Remedies in Event of Default If the District defaults in the payment of principal, interest, or redemption price on the Bonds when due, or if it fails to make payments into any fund or funds created in the Bond Resolution, or defaults in the observance or performance of any other covenants, conditions, or obligations set forth in the Bond Resolution, the Registered Owners have the statutory right of a writ of mandamus issued by a court of competent jurisdiction requiring the District and its officials to observe and perform the covenants, obligations, or conditions prescribed in the Bond Resolution. Except for mandamus, the Bond Resolution does not specifically provide for remedies to protect and enforce the interests of the Registered Owners. There is no acceleration of maturity of the Bonds in the event of default and, consequently, the remedy of mandamus may have to be relied upon from year to year. Further, there is no trust indenture or trustee, and all legal actions to enforce such remedies would have to be undertaken at the initiative of, and be financed by, the Registered Owners. Statutory language authorizing local governments such as the District to sue and be sued does not waive the local government’s sovereign immunity from suits for money damages. In the absence of other waivers of such immunity by the Texas Legislature, a default by the District in its covenants in the Bond Resolution may not be reduced to a judgment for money damages. If such a judgment against the District were obtained, it could not be enforced by direct levy and execution against the District’s property. Further, the Registered Owners cannot themselves foreclose on property within the District or sell property within the District to enforce the tax lien on taxable property to pay the principal of and interest on the Bonds. The enforceability of the rights and remedies of the Registered Owners may further be limited by a State of Texas statute reasonably required to attain an important public purpose or by laws relating to bankruptcy, reorganization or other similar laws of general application affecting the rights of creditors of political subdivisions, such as the District. See “RISK FACTORS—Registered Owners’ Remedies and Bankruptcy Limitations.”

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Legal Investment and Eligibility to Secure Public Funds in Texas The following is quoted from Section 49.186 of the Texas Water Code, and is applicable to the District: “(a) All bonds, notes, and other obligations issued by a district shall be legal and authorized investments for all banks, trust companies, building and loan associations, savings and loan associations, insurance companies of all kinds and types, fiduciaries, and trustees, and for all interest and sinking funds and other public funds of the state, and all agencies, subdivisions, and instrumentalities of the state, including all counties, cities, towns, villages, school districts, and all other kinds and types of districts, public agencies, and bodies politic.” “(b) A district’s bonds, notes, and other obligations are eligible and lawful security for all deposits of public funds of the state, and all agencies, subdivisions, and instrumentalities of the state, including all counties, cities, towns, villages, school districts, and all other kinds and types of districts, public agencies, and bodies politic, to the extent of the market value of the bonds, notes, and other obligations when accompanied by any unmatured interest coupons attached to them.” The Public Funds Collateral Act (Chapter 2257, Texas Government Code) also provides that bonds of the District (including the Bonds) are eligible as collateral for public funds. No representation is made that the Bonds will be suitable for or acceptable to financial or public entities for investment or collateral purposes. No representation is made concerning other laws, rules, regulations, or investment criteria which might apply to or which might be utilized by any of such persons or entities to limit the acceptability or suitability of the Bonds for any of the foregoing purposes. Prospective purchasers are urged to carefully evaluate the investment quality of the Bonds as to the suitability or acceptability of the Bonds for investment or collateral purposes. Defeasance The Bond Resolution provides that the District may discharge its obligations to the Registered Owners of any or all of the Bonds to pay principal, interest and redemption price thereon in any manner permitted by law. Under current Texas law, such discharge may be accomplished either (i) by depositing with the Comptroller of Public Accounts of the State of Texas a sum of money equal to the principal of, premium, if any, and all interest to accrue on the Bonds to maturity or redemption or (ii) by depositing with any place of payment (paying agent) of the Bonds or other obligations of the District payable from revenues or from ad valorem taxes or both or with a commercial bank or trust company designated in the proceedings authorizing such discharge, amounts sufficient to provide for the payment and/or redemption of the Bonds; provided that such deposits may be invested and reinvested only in (a) direct obligations of the United States of America, (b) noncallable obligations of an agency or instrumentality of the United States, including obligations that are unconditionally guaranteed or insured by the agency or instrumentality and that, on the date the governing body of the District adopts or approves the proceedings authorizing the issuance of refunding bonds, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent, and (c) noncallable obligations of a state or an agency or a county, municipality, or other political subdivision of a state that have been refunded and that, on the date the governing body of the District adopts or approves the proceedings authorizing the issuance of refunding bonds, are rated as to investment quality by a nationally recognized investment rating firm not less than AAA or its equivalent, and which mature and/or bear interest payable at such times and in such amounts as will be sufficient to provide for the scheduled payment and/or redemption of the Bonds. Upon such deposit as described above, such bonds shall no longer be regarded as outstanding or unpaid. After firm banking and financial arrangements for the discharge and final payment or redemption of the Bonds have been made as described above, all rights of the District to initiate proceedings to call the Bonds for redemption or take any other action amending the terms of the Bonds are extinguished; provided, however, that the right to call the Bonds for redemption is not extinguished if the District: (i) in the proceedings providing for the firm banking and financial arrangements, expressly reserves the right to call the Bonds for redemption; (ii) gives notice of the reservation of that right to the owners of the Bonds immediately following the making of the firm banking and financial arrangements; and (iii) directs that notice of the reservation be included in any redemption notices that it authorizes. There is no assurance that the current law will not be changed in the future in a manner which would permit investments other than those described above to be made with amounts deposited to defease the Bonds.

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BOOK-ENTRY-ONLY SYSTEM The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the District believes to be reliable, but the District takes no responsibility for the accuracy or completeness thereof The District cannot and does not give any assurances that DTC, DTC Direct Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the Bonds, (b) Bonds representing ownership interest in or other confirmation or ownership interest in the Bonds, or (c) prepayment or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Bonds, or that they will do so on a timely basis or that DTC, DTC Direct Participants or DTC Indirect Participants will act in the manner described in this Official Statement. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedure” of DTC to be followed in dealing with DTC Direct Participants are on file with DTC. The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Bonds. The Bonds, of each series will be issued as fully-registered Bonds registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. With respect to each series of the Bonds, one fully-registered Bond certificate will be issued of each such series for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.6 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a rating of “AA+” by S&P Global Ratings. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in tum to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.

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Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). All payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the District or the Paying Agent/Registrar, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with Bonds held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Paying Agent/Registrar, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or the Paying Agent/Registrar, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the District or the Paying Agent/Registrar. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The District may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the District believes to be reliable, but neither the District nor the Underwriter take any responsibility for the accuracy thereof.

THE DISTRICT General Harris County Municipal Utility District No. 473 (the “District”) is a municipal utility district created under Article XVI, Section 59 of the Texas Constitution pursuant to an order of the Texas Commission on Environmental Quality (the “TCEQ” or “Commission”) on March 1, 2006, and operates under the provisions of Article III, Section 52, Texas Constitution, Chapter 8250 of the Special District Local Laws Code, Chapters 49 and 54 of the Texas Water Code and other general statutes applicable to municipal utility districts. The District is located wholly within the corporate limits of the City of Baytown, Texas (“Baytown” or the “City”). The District is empowered, among other things, to purchase, construct, operate and maintain all works, improvements, facilities and plants necessary for the supply and distribution of water; the collection, transportation, and treatment of wastewater; and the control and diversion of storm water. The District may issue bonds and other forms of indebtedness to purchase or construct such facilities. The District is also empowered to establish parks and recreational facilities for the residents of the District (and after voter authorization to issue bonds for park and recreational facilities), to contract for or employ its own peace officers, and, after approval by the Commission and the voters of the District, to establish, operate, and maintain fire-fighting facilities, independently or with one or more conservation and reclamation districts. Additionally, the District is empowered to purchase, construct, and maintain roads and related improvements permitted under the Texas Water Code, and issue bonds for such roads. The Commission exercises continuing supervisory jurisdiction over the District. The District is required to observe certain requirements of the City of Baytown, Texas which, along with Texas law, limit the purposes for which the District may sell bonds for the acquisition, construction, and improvement of waterworks, wastewater, drainage, road, and the refunding of outstanding debt obligations; limit the net effective interest rate on such bonds and other terms of such bonds; and require certain public facilities to be designed in accordance with applicable City standards. Construction of the District’s system is subject to the regulatory jurisdiction of additional government agencies. See “THE WATER SUPPLY AND WASTEWATER TREATMENT SYSTEM.” Location of District

The District contains approximately 198 acres of land, including approximately 59 acres of land annexed into the District on July 13, 2020 (the “Annexation Tract”). The District is located approximately 21 miles east of the Central Business District of Houston in Harris County, Texas. Access to the District is provided by Thompson Road on the District’s eastern boundary, Interstate Highway 10 on the District’s northern boundary, and TX-330 on the District’s southwestern boundary. The Annexation Tract is noncontiguous to the original boundaries of the District and is located approximately 5 miles east of the original boundaries of the District at the intersection of Interstate Highway 10 on its northern boundary and Sjolander Road on its eastern boundary. See “AERIAL PHOTOGRAPH” herein.

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Land Use The District is being developed as Thompson Ten Business Park for industrial, warehouse and distribution purposes. Water, sanitary sewer and drainage facilities have been constructed to serve approximately 106 acres of developable land in the District, on which approximately 86 acres have vertical improvements. In addition, the District has approximately 59 acres that have not been provided water, sanitary sewer or storm drainage facilities (consisting of the Annexation Tract) and approximately 33 acres of undevelopable land consisting of Harris County Flood Control District right-of-way, street right-of-way, and a detention reserve. Status of Development Development in Thompson Ten Business Park primarily consists of the following warehouse/office/distribution facilities on approximately 86 acres: (1) an approximately 33,000 square foot warehouse/distribution facility owned by Vigavi Realty LLC and leased to Tidal Tank and Sprint Industrial (the “Tidal Tank Facility”) on approximately 14 acres, (2) two commercial warehouse/distribution/office buildings owned by Sealy IDV Thompson 10, LLC (the “Investment & Development Ventures Facility”) totaling approximately 390,000 square feet on approximately 27 acres, of which approximately 130,000 square feet have been leased to a cotton distribution company, (3) an approximately 35,000 square foot warehouse/distribution facility owned by Tuffi Company Inc. and leased to B&G Crane Service LLC (the “B&G Crane Service Facility”) on approximately 12 acres, (4) an approximately 25,000 square foot warehouse/distribution facility owned by TTBP Investments LLC and leased to Evergreen Tank (the “Evergreen Tank Facility”) on approximately 10 acres, (5) an approximately 30,000 square foot Clean as New Gulf Coast building (the “Clean as New Gulf Coast Facility”) on approximately 6 acres, (6) an approximately 118,000 square-foot warehouse/distribution/office facility recently constructed and owned by Adkisson Development Group (the “ADG Facility”) on approximately 9 acres, and (7) an approximately 15,000 square foot warehouse/office building owned by Lance Real Estate Investment, LLC (the “Lance Facility”) on approximately 8 acres. In addition, the Developer, as defined below, recently sold a 10-acre vacant tract to The Modern Group and two vacant tracts totaling 10 acres to Quality Mat Company. Neither The Modern Group nor Quality Mat Company has started construction on their sites. See “THE PRINCIPAL TAXPAYERS AND MAJOR LANDOWNER.”

Utility Functions and Services Allocation Agreement with the City of Baytown The District operates pursuant to a certain Utility Functions and Services Allocation Agreement with the City of Baytown (the “City”) dated as of August 31, 2005 (the “Utility Agreement”), which has been amended on December 18, 2017 and June 25, 2020 to accommodate annexations of land by the District. Pursuant to the Utility Agreement, the City must provide water supply and wastewater services to the District. The City is required to provide up to 511 equivalent single-family connections (“ESFCs”) to serve the District. In exchange, the District must design and construct certain water supply and distribution, sanitary sewer collection, transportation and treatment, storm water collection detention, and drainage systems and roadway facilities to serve lands within the District’s boundaries (the “Facilities”) in compliance with all requirements and criteria of the City. For purposes of ownership and maintenance, Facilities do not include the Stormwater Detention System which are those onsite facilities used to detain the difference in stormwater runoff between the developed and the predeveloped run-off rate for the 100-year flood plain event, if any. In addition, the District must pay to the City impact fees, in the amount as adopted by the City Council, for water supply and wastewater services. The Facilities The Utility Agreement provides that the Facilities must be designed and constructed in compliance with all applicable requirements and criteria of the City, including the City’s Consent Resolution, and of any other authorities having regulatory jurisdiction or authority over the financing, construction or operation of the Facilities. The design and construction of the Facilities is subject to the review and approval of the City. The Utility Agreement provides that the Facilities must be constructed by or on behalf of the District at the District’s sole expense. Certain of the Facilities may be oversized to serve areas not within the District. Authority of District to Issue Bonds; District Taxes The District is authorized to assess, levy and collect ad valorem taxes upon all taxable properties within the District to pay all District obligations and for operation and maintenance purposes in accordance with state law. The District has the authority to issue, sell, and deliver bonds from time to time, as deemed necessary and appropriate by the District’s Board of Directors, as permitted by federal law, state law, the City’s Consent Resolution, and the City’s Procedures for the Creation of In-City Municipal Utility Districts for all District Facilities. Unless and until the City dissolves the District and assumes the District’s assets and obligations, bonds issued by the District remain obligations solely of the District and may not be construed to be obligations or indebtedness of the City.

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Ownership, Operation, and Maintenance of the Facilities The Utility Agreement provides that, as the Facilities are acquired and constructed, the District must convey the Facilities (except for Storm Water Detention System) to the City, including all warranties. As construction of each phase of the Facilities is completed, representatives of the City must inspect the completed Facilities. If the City finds that the Facilities have been completed in accordance with the final plans and specifications, the City must accept the Facilities, and the District must convey the Facilities to the City. If the Facilities have not been completed in accordance with the final plans and specifications, the City must advise the District of the manner in which the Facilities do not comply. The District must immediately correct any defects, at which time the City must again inspect the Facilities and accept them if the defects have been corrected. After conveyance of Facilities to the City by the District, the City must operate and maintain the Facilities (except for the Storm Water Detention System and Gateway Boulevard) at its sole expense. The District or property owners’ association will be responsible for the operation and maintenance of the Storm Water Detention System. Pursuant to the Second Amendment to the Utility Agreement, after City acceptance as a public road, the District will assume maintenance obligations of Gateway Boulevard pursuant to an agreement with the property owners association. Rates for Service Under the Utility Agreement, the City agrees to bill and collect from customers of the Facilities such rates and charges from such customers of the Facilities as the City, in its sole discretion, determines are necessary, provided that the rates and charges for services afforded by the Facilities will be equal and uniform to those charged other similar classifications of users in non-municipal utility district areas of the City. In addition, the City may impose a charge for connection to the Facilities at a rate determined by the City, provided the charge is equal to sums charged to other City users for comparable connections. As noted above, the District must pay to the City impact fees, in the amount as adopted by the City Council, for water supply and wastewater services. All revenues from the Facilities shall belong exclusively to the City. Dissolution of the District The City has the right to abolish and dissolve the District and to acquire the District’s assets and assume the District’s obligations in accordance with state law. The Utility Agreement provides, however, that the City may not dissolve the District until the Facilities required to serve the District have been completed. Furthermore, the City may not dissolve the District until (i) the Developer(s) developing Facilities in the District have been reimbursed by the District to the maximum extent permitted by state law, or (ii) the City assumes any obligation for such reimbursement of the District. To discharge any remaining District obligations, the City may (i) if requested by the District in writing, authorize the District to sell its bonds before or during a transition period prior to the effective date of the dissolution, as established by the City, (ii) pursuant to state law, issue and sell bonds of the City in at least the amount necessary to discharge the District’s obligations, including those under any utility development and reimbursement agreements with Developers in the District, or (iii) provide written notice to the District that the City has sufficient funds available from other sources to discharge the District’s obligations, including those under the utility development and reimbursement agreements with Developers in the District.

MANAGEMENT

Board of Directors The District is governed by the Board of Directors, consisting of five directors, which has control over and management supervision of all affairs of the District. None of the Directors reside within the District; however, each Director owns a small parcel of land within the District subject to a Note and Deed of Trust in favor of the Developer. Directors are elected by the voters within the District for four-year staggered terms. Director elections are held only in even numbered years. The directors and officers of the District are listed below:

While the District does not employ any full-time employees, it has contracted for certain services as follows:

Name Title Term Expires

Teri Laguarta President May 2022

Vacant Vice President May 2022

Jason Klump Secretary May 2022

Thomas Korstad Director May 2024

Allen Hall Director May 2024

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Tax Assessor/Collector Land and improvements within the District are appraised for ad valorem taxation purposes by Harris County Appraisal District. The District’s contracts with B&A Municipal Tax Service, LLC to serve as Tax Assessor/Collector. Bookkeeper The District has engaged F Matuska, Inc. to serve as the District’s bookkeeper. Engineer The consulting engineer for the District in connection with the design and construction of the District’s facilities is Culp Engineering, LLC (the “Engineer”). Attorney The District engages Allen Boone Humphries Robinson LLP as general counsel and as Bond Counsel in connection with the issuance of the Bonds. The legal fees to be paid Bond Counsel for services rendered in connection with the issuance of the Bonds are based on a percentage of the Bonds actually issued, sold and delivered and, therefore, such fees are contingent on the sale and delivery of the Bonds. Financial Advisor Masterson Advisors LLC (the “Financial Advisor”) serves as financial advisor to the District. The fees to be paid the Financial Advisor for services rendered in connection with the issuance of the Bonds are based on a percentage of the Bonds actually issued, sold and delivered and, therefore, such fees are contingent on the sale and delivery of the Bonds. Disclosure Counsel

The District has engaged McCall, Parkhurst & Horton L.L.P., Houston, Texas as disclosure counsel. The fees paid to disclosure counsel in connection with the issuance of the Bonds are contingent upon the sale and delivery of the Bonds. Auditor As required by the Texas Water Code, the District retains an independent auditor to audit the District’s financial statements annually, which annual audit is filed with the TCEQ. The District’s financial statements for the fiscal year ending June 30, 2019 were audited by the independent account firm of McGrath & Co., PLLC. See “APPENDIX A” for a copy of the audited financial statement of the District as of June 30, 2019. The District has engaged McGrath & Co., PLLC to audit the District’s financial statements for the fiscal year ending June 30, 2020.

THE DEVELOPER Role of a Developer In general, the activities of a developer in a municipal utility district such as the District include designing the project; defining a marketing program and setting building schedules; securing necessary governmental approvals and permits for development; arranging for the construction of roads and the installation of utilities; and selling or leasing improved tracts or commercial reserves to other developers or third parties. While a developer is required by the Commission to pave streets (in areas where district facilities are being financed with bonds), a developer is under no obligation to a district to undertake development activities according to any particular plan or schedule. Furthermore, there is no restriction on a developer’s right to sell any or all of the land which the developer owns within a district. In addition, the developer is ordinarily the major taxpayer within the district during the early stages of development. The relative success or failure of a developer to perform in the above-described capacities may affect the ability of a district to collect sufficient taxes to pay debt service and retire bonds.

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Fuller Thompson Ten, Ltd.

The developer of the Thompson Ten Business Park is Fuller Thompson Ten, Ltd., a Texas limited partnership (the “Developer”) created for the sole purpose of developing the land in the District. The general partner of the Developer is Fuller Thompson GP LLC, a Texas limited liability company. With the consent of the District and pursuant to a development financing agreement, the Developer has financed and, subject to certain conditions, is entitled to be reimbursed by the District for the design and construction of certain water, sanitary sewer, drainage and road facilities. The Developer recently sold a 10-acre vacant tract to The Modern Group and two vacant tracts totaling 10 acres to Quality Mat Company and does not own any developable acreage in the District. The Developer nor any of its affiliates, is obligated to pay principal of or interest on the Bonds. Furthermore, the Developer does not have a binding commitment to the District to carry out any plan of development and the Developer may sell or otherwise dispose of its property, or any other assets, at any time, and the furnishing of information relating to the proposed development by the Developer should not be interpreted as such a commitment. Prospective purchasers are encouraged to inspect the District in order to acquaint themselves with the nature of development that has occurred or is occurring within the boundaries of the District. See “RISK FACTORS.”

THE PRINCIPAL TAXPAYERS AND MAJOR LANDOWNER

Principal Taxpayers Based upon the 2019 certified tax rolls, the top ten taxpayers are responsible for approximately 91.16% ($39,650,310) of the District’s 2019 taxes. Sprint Safety, a subsidiary of Sprint Industrial which is a subsidiary of Republic Services, Inc., is the largest taxpayer within the District. Sprint Safety, which represents approximately 19.24% ($8,370,199) of the certified portion of the District’s 2019 Taxable Assessed Valuation, owns a portion of the personal property in the Tidal Tank Facility. The second largest taxpayer is Vigavi Realty LLC, which represents approximately 14.77% ($6,424,706) of the certified portion of the District’s 2019 Taxable Assessed Value, consisting of the approximately 33,000 square foot warehouse/distribution Tidal Tank Facility. The fourth largest taxpayer is Tidal Tank, which represents approximately 10.42% ($4,534,096) of the certified portion of the District’s 2019 Taxable Assessed Value, consisting of a portion of the personal property in the Tidal Tank Facility. In the aggregate, the value of the property owned by these three taxpayers is $19,329,001 or approximately 44.44% of the District’s 2019 Taxable Assessed Value. The Tidal Tank Facility opened in 2016 and provides specialized industrial equipment (liquid and solid storage tanks) for the energy, industrial and environmental sectors. The third largest taxpayer is Sealy IDV Thompson 10, LLC, which represents approximately 11.28% ($4,908,620) of the certified portion of the District’s 2019 Taxable Assessed Value, consisting of the approximately 390,000 square foot Investment & Development Ventures Facility, of which approximately 130,000 square feet has been leased to a cotton distribution company. The fifth largest taxpayer is Tuffi Company, Inc., which represents approximately 10.19% ($4,433,640) of the certified portion of the District’s 2019 Taxable Assessed Value, consisting of the approximately 33,000 square foot B&G Crane Service Facility. The seventh largest taxpayer is B&G Crane Services, LLC, which represents 5.04% ($2,193,734) of the certified portion of the District’s 2019 Taxable Assessed Value, consisting of the personal property in the B&G Crane Service Facility. B&G Crane Service, LLC is a subsidiary of Maxim Crane Works, L.P. In aggregate, the value of the property owned by these two taxpayers is $6,627,374 or approximately 15.24% of the District’s 2019 Taxable Assessed Value. The B&G Crane Service Facility opened in 2015, and B&G provides crane rental and lifting services. The sixth largest taxpayer is TTBP Investments LLC, which represents approximately 7.12% ($3,095,547) of the certified portion of the District’s 2019 Taxable Assessed Value, consisting of the approximately 25,000 square foot Evergreen Tank Facility. Evergreen Tank is a subsidiary of Mobile Mini Solutions and is a supplier of a large variety of storage tanks and trucks. The Evergreen Tank Facility opened in 2018. See “THE DISTRICT—Status of Development,” “TAX DATA—Principal Taxpayers, Summary of Assessed Valuation” See “THE DISTRICT—Status of Development,” “TAX DATA—Principal Taxpayers,” and “RISK FACTORS—Dependence on Personal Property Tax Collections.”  Major Landowner Gateway 10 Business Park, LLC is the owner of approximately 59 acres of land which was annexed into the boundaries of the District effective July 13, 2020. Such acreage is not served with utilities and does not have any vertical improvement built upon it. The taxable value associated with such acreage is unknown at this time and will not appear on the District’s tax roll until January 1, 2021. Such acreage is planned for light industrial development.

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THE WATER SUPPLY AND WASTEWATER TREATMENT SYSTEM

Regulation The District is financing the acquisition and construction of a portion of the water, wastewater, and drainage facilities to serve property in the District (the “System”) with the proceeds of the sale of Bonds. See “USE AND DISTRIBUTION OF BOND PROCEEDS” herein. Such facilities have been designed in conformance with accepted engineering practices and the requirements of certain governmental agencies having regulatory or supervisory jurisdiction over the construction and operation of such facilities, including, as applicable among others, the TCEQ, Harris County, and the City of Baytown (the “City”). According to the District’s engineer, all such facilities constructed to date have been approved by all required governmental agencies. During construction, such facilities are subject to inspection by the foregoing governmental agencies having jurisdiction. Upon completion, the water and wastewater facilities will be transferred to the City. The water and wastewater facilities constructed in the District are owned and operated by the City, and the customers of such facilities in the District pay rates and charges directly to the City. See “THE DISTRICT—Utility Functions and Services Allocation Agreement with the City of Baytown.” Operation of the System is subject to regulation by, among others, the United States Environmental Protection Agency, the TCEQ, and the Texas Department of Health. According to the District’s engineer, the Flood Insurance Rate Map currently in effect published by the Federal Emergency Management Agency which covers land located in the District indicates that a small portion of the land located in the District is located within the 100-year floodplain, none of which is planned for development. Water Supply and Wastewater Treatment: Entities in the District receive their water and sewer service from the City and pay their water and sewer bills directly to the City. Pursuant to the Utility Functions and Services Allocation Agreement with the City (the “Utility Agreement”), the District has conveyed or will convey its water, sewer, and drainage facilities to the City and the City will operate and maintain the water and sewer utilities so conveyed. The District has reserved 511 ESFCs of water and wastewater treatment capacity, which is adequate to serve the build-out of the District given currently anticipated development plans. Drainage: Internal storm-water collection lines have been constructed for drainage system improvements to serve the District’s development. This system serves the entire District’s drainage area and conveys flows to the District’s storm water detention basin owned and maintained by the District. The detention basin is designed to ultimately drain to Spring Creek Gully. 100-Year Flood Plain: “Flood Insurance Rate Map” or “FIRM” means an official map of a community on which the Federal Emergency Management Agency (“FEMA”) has delineated the appropriate areas of flood hazards. The 1% chance of probable inundation, also known as the 100-year flood plain, is depicted on these maps. The “100‐year flood plain” (or 1% chance of probable inundation) as shown on the FIRM is the estimated geographical area that would be flooded by a rainstorm of such intensity to statistically have a one percent chance of occurring in any given year. Generally speaking, homes must be built above the 100‐year flood plain in order to meet local regulatory requirements and to be eligible for federal flood insurance. An engineering or regulatory determination that an area is above the 100‐year flood plain is no assurance that homes built in such area will not be flooded. The District’s drainage system has been designed and constructed to all current standards. According to the Engineer, a small portion of the District is within the floodplain, however no development is planned in the floodplain. The National Weather Service recently completed a rainfall study known as National Oceanic and Atmospheric Administration (“NOAA”) Atlas 14, Volume 11 Participation-Frequency Atlas of for United States (“Atlas 14”). Floodplain boundaries within the District may be redrawn based on the Atlas 14 study based on a higher statistical rainfall amount, resulting in interim floodplain regulations applying to a larger number of properties and consequently leaving less developable property within the District. Such regulations could additionally result in higher insurance rates, increased development fees, and stricter building codes for any property located within the expanded boundaries of the floodplain.

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USE AND DISTRIBUTION OF BOND PROCEEDS Of proceeds to be received from sale of the Bonds, $4,368,556 is estimated for engineering and construction costs, and $1,846,444 is estimated for non-construction costs, including twelve months of capitalized interest.

Future Debt The Developer has financed the engineering and construction costs of water, sanitary sewer and drainage facilities and road improvements to serve District as well as certain other District improvements. After reimbursement from the Bonds, the Developer will have expended approximately $2,000,000 (as of June 30, 2020) for design and construction of District road improvements not yet reimbursed. It is anticipated that proceeds from future issues of District bonds will be used, in whole or in part, to reimburse the Developer for these costs. The District can make no representation that any additional development will occur within the District. The Engineer has stated that the District’s authorized but unissued bonds will be adequate, under present land use projections, to finance such improvements.

UNLIMITED TAX BONDS AUTHORIZED BUT UNISSUED

Date of Amount Authorization Purpose Authorized

Issued to Date

Amount Unissued

5/04/2019 Water, Sanitary Sewer and Drainage (“WS&D”) and $33,900,000

$6,215,000

$27,685,000*

Refunding of WS&D Bonds

5/04/2019 Roads and Refunding of Road Bonds $14,700,000

$-0-

$14,700,000

* Includes the Bonds.

CONSTRUCTION COSTSThompson Ten, Section 1 - Clearing and Grubbing……………………… 165,772$ Thompson Ten, Section 1 - Rough Grading and Drainage……………… 1,223,705 Thompson Ten, Section 1 - Water, Sewer and Drainage………………… 1,137,507 Thompson Ten Business Park, Section 2 - Clearing & Grubbing……… 58,739 Thompson View Drive - Water, Sewer and Drainage…………………… 1,023,750 Engineering and Testing…………………………………………………… 315,685 Land Costs - Detention Pond……………………………………………… 443,398

Total Construction Costs 4,368,556$

NON-CONSTRUCTION COSTS

Legal Fees…………………………………………………………………… 164,300$ Financial Advisory Fees…………………………………………………… 113,225 Developer Interest (estimated)………………………………….………… 838,660 Capitalized Interest (12 months at estimated 4.50%)…………………… 279,675 Bond Discount (Estimated at 3%)………………………………………… 186,450 Operating Costs……………………………………………………………… 148,985 Bond Issuance Expense…………………………………………………… 40,358 Bond Application Report………………………………………………….. 53,038 TCEQ Fee (0.25%)…………………………………………………………… 15,538 Attorney General Fee……………………………………………………… 6,215

Total Non-Construction Costs 1,846,444$

TOTAL BOND ISSUE 6,215,000$

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FINANCIAL STATEMENT

2019 Certified Taxable Assessed Valuation .................................................................................................... $43,497,567 (a) 2020 Preliminary Taxable Assessed Valuation ................................................................................................ $70,495,190 (b) Estimated Taxable Assessed Valuation as of June 1, 2020 ............................................................................... $75,736,751 (c) Gross Debt Outstanding (after the issuance of the Bonds) ............................................................................... $6,215,000 Ratios of Gross Debt to:

2020 Preliminary Taxable Assessed Valuation ......................................................................................... 8.82% Estimated Taxable Assessed Valuation as of June 1, 2020 ....................................................................... 8.21%

Area of District — 198 acres

(a) As certified by the Harris County Appraisal District (the “Appraisal District”). Such amount does not include the “Annexation Tract.” See “TAX PROCEDURES.”

(b) Provided by the Appraisal District as a preliminary indication of the 2020 taxable (as of January 1, 2020), including personal property taxable value from tax year 2019 in the amount of $18,131,130. Such amount is subject to protest, review and downward adjustment prior to certification. No tax will be levied on such amount until it is certified. Such amount does not include the “Annexation Tract.” See “TAX PROCEDURES.”

(c) Provided by the Appraisal District for informational purposes only. Such amounts reflect an estimate of the taxable appraised value within the District on June 1, 2020. No tax will be levied on such amount. Taxes are levied on taxable value certified by the Appraisal District as of January 1 of each year. Such amount does not include the “Annexation Tract.” See “TAX PROCEDURES.”

Cash and Investment Balances (unaudited as of August 12, 2020) General Fund Cash and Temporary Investments $233,757 Capital Projects Fund Cash and Temporary Investments $0 Debt Service Fund Cash and Temporary Investments $0 (a) (a) In addition, accrued interest and twelve months of capitalized interest will be deposited into the Debt Service Fund from Bond proceeds.

Neither the Bond Resolution nor Texas law requires that the District maintain any particular balance in the Debt Service Fund. District Investment Policy

The District’s goal is to minimize credit and market risks while maintaining a competitive yield on its portfolio. Funds of the District are invested either in short term U.S. Treasury obligations or certificates of deposit insured by the Federal Deposit Insurance Corporation or secured by collateral held by a third-party institution. The District does not own any long-term securities or derivative products in the District’s investment portfolio.

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ESTIMATED OVERLAPPING DEBT STATEMENT Expenditures of the various taxing entities within the territory of the District are paid out of ad valorem taxes levied by such entities on properties within the District. Such entities are independent of the District and may incur borrowings to finance their expenditures. This statement of direct and estimated overlapping ad valorem tax bonds (“Tax Debt”) was developed from information contained in the ‘Texas Municipal Reports” published by the Municipal Advisory Council of Texas. Except for the amounts relating to the District, the District has not independently verified the accuracy or completeness of such information, and no person should rely upon such information as being accurate or complete. Furthermore, certain of the entities listed may have issued additional bonds since the date hereof, and such entities may have programs requiring the issuance of substantial amounts of additional bonds, the amount of which cannot be determined. The following table reflects the estimated share of the overlapping Tax Debt of the District.

(a) Includes the Bonds. Overlapping Tax Rates for 2019

OutstandingTaxing Jurisdiction Bonds As of Percent Amount

Harris County…………………………………………… 1,478,697,125$ 5/1/2020 0.01% 147,870$ Harris County Department of Education……………… 6,320,000 5/1/2020 0.01% 632 Harris County Flood Control District…....................... 83,075,000 5/1/2020 0.01% 8,308 Harris County Hospital District…………….............… 86,050,000 5/1/2020 0.01% 8,605 Port of Houston Authority…………………………… 572,569,394 5/1/2020 0.01% 57,257 Goose Creek Consolidated ISD…................................. 564,166,000 5/1/2020 0.29% 1,636,081 Lee College District…..................................................... 41,115,000 5/1/2020 0.28% 115,122 City of Baytown….......................................................... 189,640,000 5/1/2020 1.01% 1,915,364

Total Estimated Overlapping Debt…………………… 3,889,239$

The District……………………………………………. 6,215,000 (a) Current 100.00% 6,215,000

Total Direct and Estimated Overlapping Debt……… 10,104,239$

Ratio of Estimated Direct and Overlapping Debt to 2020 Preliminary Taxable Assessed Valuation……………………… 14.33%Ratio of Estimated Direct and Overlapping Debt to the Estimated Assessed Valuation as of June 1, 2020……………… 13.34%

Overlapping

2019 Tax Rateper $100 of Taxable

Assessed Valuation

Harris County……………………………………...…………… 0.616700$ City of Baytown……………………………………...………… 0.802030 Goose Creek CISD……………………………………………… 1.354280 Lee College District…………………………………………… 0.230100

Total Overlapping Tax Rate…………………………………… 3.003110$ The District……………………………………………………… 0.800000 Total Tax Rate…………………………………………………… 3.803110$

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TAX DATA

Tax Collections The following statement of tax collections sets forth in condensed form the historical tax collection experience of the District. This summary has been prepared for inclusion herein, based upon information from District records. Reference is made to these records for further and more complete information.

(a) Unaudited. (b) Initial year of tax levy. Taxes are due October 1 or when billed, whichever comes later, and become delinquent if not paid before February 1 of the year following the year in which imposed. No split payments are allowed, and no discounts are allowed. Tax Rate Distribution

Tax Rate Limitations Debt Service: Unlimited (no legal limit as to rate or amount). Maintenance and Operations: $1.50 per $100 of taxable assessed valuation. Maintenance and Operations for Roads: $0.25 per $100 of taxable assessed valuation. Debt Service Tax The Board covenants in the Bond Resolution to levy and assess, for each year that all or any part of the Bonds remain outstanding and unpaid, a tax adequate to provide funds to pay the principal of and interest on the Bonds. The District did not levy a debt service tax for 2019. The District anticipates levying its initial debt service tax rate in fall 2020. Maintenance Tax The Board of Directors of the District has the statutory authority to levy and collect an annual ad valorem tax for maintenance of the District’s improvements, if such maintenance tax is authorized by vote of the District’s electors. On May 4, 2019, the Board was authorized to levy such a maintenance tax in an amount not to exceed $1.50 per $100 of assessed valuation and to also levy a maintenance tax for operation and maintenance of roads in an amount not to exceed $0.25 per $100 of assessed valuation. Such maintenance taxes are in addition to taxes which the District is authorized to levy for paying principal of and interest on the District’s bonds. For the 2019 tax year, the District levied a tax for maintenance and operations in the amount of $0.80 per $100 assessed valuation. Tax Exemptions As discussed in the section titled “TAX PROCEDURES” herein, certain property in the District may be exempt from taxation by the District. For 2020, the District has not granted any residential homestead exemptions.

CertifiedTaxable

Tax Assessed Tax TotalYear Valuation Rate Tax Levy Amount Percent

2019 (b) 43,497,567$ 0.800$ 347,981$ 347,981$ 100.00%

Total Collectionsas of June 30, 2020 (a)

Anticipated2020 2019 (a)

Debt Service 0.620$ -$ Maintenance and Operations 0.180 0.800 Total 0.800$ 0.800$

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Additional Penalties The District has contracted with a delinquent tax attorney to collect certain delinquent taxes. In connection with that contract, the District established an additional penalty of twenty percent (20%) of the tax to defray the costs of collection. This 20% penalty applies to taxes that either: (1) become delinquent on or after February 1 of a year, but not later than May 1 of that year, and that remain delinquent on April 1 (for personal property) and July 1 (for real property) of the year in which they become delinquent or (2) become delinquent on or after June 1, pursuant to the Texas Property Tax Code. Principal Taxpayers The following list of principal taxpayers was provided by the District’s tax assessor/collector and represents the principal taxpayers’ value as a percentage of the 2019 Certified Taxable Assessed Valuation of $43,497,567. This represents ownership as of January 1, 2019. Principal taxpayer lists related to the 2020 Preliminary Taxable Assessed Valuation and Estimated Taxable Assessed Valuation as of June 1, 2020 are not available from the Appraisal District.

(a) Sprint Safety and Tidal Tank are related entities who lease the land and improvements owned by Vigavi Realty LLC. See “RISK

FACTORS—Dependence on Personal Property Tax Collections,” “THE DISTRICT—Status of Development,” and “THE PRINCIPAL TAXPAYERS AND MAJOR LANDOWNER.”

(b) B&G Crane Service LLC leases the land and improvements owned by Tuffi Company Inc. See “RISK FACTORS—Dependence on Personal Property Tax Collections,” “THE DISTRICT—Status of Development,” and “THE PRINCIPAL TAXPAYERS AND MAJOR LANDOWNER.”

(c) The Developer. The Developer recently sold a 10-acre vacant tract to The Modern Group and two vacant tracts totaling 10 acres to Quality Mat Company and no longer owns any developable acreage in the District. See “THE DEVELOPER.”

Summary of Assessed Valuation The following summary of the 2019 and 2018 Certified Taxable Assessed Valuations are provided by the District’s Tax Assessor/Collector based on information provided by the Appraisal District and contained in the 2019 and 2018 tax rolls of the District. Differences in totals may vary slightly from other information herein due to differences in dates of data. Breakdowns related to the 2020 Preliminary Taxable Assessed Valuation and Estimated Taxable Assessed Valuation as of June 1, 2020 are not available from the Appraisal District.

% of2019 Certified 2019 Certified

Taxable Assessed Taxable AssessedTaxpayer Type of Property Valuation Valuation

Sprint Safety (a) Personal Property 8,370,199$ 19.24%Vigavi Realty LLC (a) Land & Improvements 6,424,706 14.77%Sealy IDV Thompson 10 LLC Land & Improvements 4,908,620 11.28%Tidal Tank (a) Personal Property 4,534,096 10.42%Tuffi Company Inc. (b) Land & Improvements 4,433,640 10.19%TTBP Investments LLC Land & Improvements 3,095,547 7.12%B&G Crane Service LLC (b) Personal Property 2,193,734 5.04%Bealine Service Co Inc. Personal Property 2,068,360 4.76%Lance Real Estate Investments LLC Land & Improvements 2,037,453 4.68%Fuller Thompson Ten Ltd (c) Land & Improvements 1,583,955 3.64% Total 39,650,310$ 91.16%

2019 2018Certified Taxable Certified Taxable

Valuation ValuationLand 13,975,373$ 12,465,148$ Improvements 11,671,588 7,201,101 Personal Property 18,131,130 12,225,429 Exemptions (280,524) (280,355) Total 43,497,567$ 31,611,323$

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Tax Adequacy for Debt Service The calculations shown below assume, solely for purposes of illustration, no increase or decrease in assessed valuation over the 2020 Preliminary Taxable Assessed Valuation or Estimated Taxable Assessed Valuation as of June 1, 2020, no use of available funds, and utilize tax rates necessary to pay the District’s average annual debt service requirements on the Bonds. See “RISK FACTORS—Impact on District Tax Rates” and “DEBT SERVICE REQUIREMENTS.”

Average annual debt service requirement (2022-2045) ....................................................................... $402,421

$0.64 tax rate on the 2020 Preliminary Taxable Assessed Valuation of $70,495,190 at a 90% collection rate produces ......................................................................... $406,052 $0.60 tax rate on the Estimated Taxable Assessed Valuation as of June 1, 2020 of $75,736,751 at a 90% collection rate produces ......................................................................... $408,978

No representation or suggestion is made that the 2020 Preliminary Taxable Assessed Valuation or Estimated Assessed Valuation as of June 1, 2020 will not be adjusted downward once certified and no person should rely upon such amounts or their inclusion herein as assurance of their attainment. See “TAX PROCEDURES.”

TAX PROCEDURES Authority to Levy Taxes The Board is authorized to levy an annual ad valorem tax, without legal limitation as to rate or amount, on all taxable property within the District in an amount sufficient to pay the principal of and interest on the Bonds and any additional bonds payable from taxes which the District may hereafter issue (see “RISK FACTORS—Future Debt”) and to pay the expenses of assessing and collecting such taxes. The District agrees in the Bond Resolution to levy such a tax from year to year as described more fully herein under “THE BONDS—Source of and Security for Payment.” Under Texas law, the Board may also levy and collect an annual ad valorem tax for the operation and maintenance of the District and for the payment of certain contractual obligations. See “TAX DATA—Debt Service Tax” and “—Maintenance Tax” Property Tax Code and County-Wide Appraisal District Title I of the Texas Tax Code (the “Property Tax Code”) specifies the taxing procedures of all political subdivisions of the State of Texas, including the District. Provisions of the Property Tax Code are complex and are not fully summarized here. The Property Tax Code requires, among other matters, county-wide appraisal and equalization of taxable property values and establishes in each county of the State of Texas an appraisal district with the responsibility for recording and appraising property for all taxing units within a county and an appraisal review board with responsibility for reviewing and equalizing the values established by the appraisal district. The Harris County Appraisal District (the “Appraisal District”) has the responsibility for appraising property for all taxing units within Harris County, including the District. Such appraisal values are subject to review and change by the Harris County Appraisal Review Board (the “Appraisal Review Board”). Property Subject to Taxation by the District Except for certain exemptions provided by Texas law, all real property, tangible personal property held or used for the production of income, mobile homes and certain categories of intangible personal property with a tax situs in the District are subject to taxation by the District. Principal categories of exempt property include, but are not limited to: property owned by the State of Texas or its political subdivisions if the property is used for public purposes; property exempt from ad valorem taxation by federal law; certain household goods, family supplies, and personal effects; certain goods, wares and merchandise in transit; farm products owned by the producer; certain property of charitable organizations, youth development associations, religious organizations, and qualified schools; designated historical sites; travel trailers; and most individually owned automobiles. In addition, the District may by its own action exempt residential homesteads of persons sixty-five (65) years or older and of certain disabled persons to the extent deemed advisable by the Board. The District may be required to offer such an exemption if a majority of voters approves it at an election. The District would be required to call such an election upon petition by twenty percent (20%) of the number of qualified voters who voted in the preceding election. The District is authorized by statute to disregard exemptions for the disabled and elderly if granting the exemption would impair the District’s obligation to pay tax supported debt incurred prior to adoption of the exemption by the District. Furthermore, the District must grant exemptions to disabled veterans or certain surviving dependents of disabled veterans, if requested, of between $5,000 and $12,000 depending on the disability rating of the veteran. A veteran who receives a disability rating of 100% is entitled to an exemption for the full amount of the veteran’s residence homestead. Additionally, subject to certain conditions, the surviving spouse of a disabled veteran who was entitled to an exemption for the full value of the veteran’s

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residence homestead is also entitled to an exemption from taxation of the total appraised value of the same property to which the disabled veteran’s exemption applied. A partially disabled veteran or certain surviving spouses of partially disabled veterans are entitled to an exemption from taxation of a percentage of the appraised value of their residence homestead in an amount equal to the partially disabled veteran’s disability rating if the residence homestead was donated by a charitable organization. Also, the surviving spouse of a member of the armed forces who was killed in action is, subject to certain conditions, entitled to a total tax exemption on such surviving spouse’s residence homestead. If the surviving spouse changes homesteads, but does not remarry, then the amount of the exemption as of the last year of the first qualifying residential homestead is applicable to the subsequent homesteads. The surviving spouse of a first responder who was killed or fatally injured in the line of duty is, subject to certain conditions, also entitled to an exemption of the total appraised value of the surviving spouse’s residence homestead, and, subject to certain conditions, an exemption up to the same amount may be transferred to a subsequent residence homestead of the surviving spouse. See “TAX DATA.” Residential Homestead Exemptions: The Property Tax Code authorizes the governing body of each political subdivision in the State of Texas to exempt up to twenty percent (20%) of the appraised value of residential homesteads from ad valorem taxation. Where ad valorem taxes have previously been pledged for the payment of debt, the governing body of a political subdivision may continue to levy and collect taxes against the exempt value of the homesteads until the debt is discharged, if the cessation of the levy would impair the obligations of the contract by which the debt was created. The adoption of a homestead exemption may be considered each year but must be adopted before July 1. Freeport Goods and Goods-in-Transit Exemptions: A “Freeport Exemption” applies to goods, wares, ores, and merchandise other than oil, gas, and petroleum products (defined as liquid and gaseous materials immediately derived from refining petroleum or natural gas), and to aircraft or repair parts used by a certified air carrier acquired in or imported into Texas which are destined to be forwarded outside of Texas and which are detained in Texas for assembling, storing, manufacturing, processing or fabricating for fewer than 175 days. Although certain taxing units may take official action to tax such property in transit and negate such exemption, the District does not have such an option. A “Goods-in-Transit” Exemption is applicable to the same categories of tangible personal property which are covered by the Freeport Exemption, if, for tax year 2011 and prior applicable years, such property is acquired in or imported into Texas for assembling, storing, manufacturing, processing, or fabricating purposes and is subsequently forwarded to another location inside or outside of Texas not later than 175 days after acquisition or importation, and the location where said property is detained during that period is not directly or indirectly owned or under the control of the property owner. For tax year 2012 and subsequent years, such Goods-in-Transit Exemption is limited to tangible personal property acquired in or imported into Texas for storage purposes only if such property is stored under a contract of bailment by a public warehouse operator at one or more public warehouse facilities in Texas that are not in any way owned or controlled by the owner of such property for the account of the person who acquired or imported such property. A property owner who receives the Goods-in-Transit Exemption is not eligible to receive the Freeport Exemption for the same property. Local taxing units such as the District may, by official action and after public hearing, tax goods-in-transit personal property. A taxing unit must exercise its option to tax goods-in-transit property before January 1 of the first tax year in which it proposes to tax the property at the time and in the manner prescribed by applicable law. The District has taken official action to allow taxation of all such goods-in-transit personal property for all prior and subsequent years. Tax Abatement Harris County or the City of Baytown may designate all or part of the area within the District as a reinvestment zone. Thereafter, Harris County, the District, and the City of Baytown may enter into tax abatement agreements with owners of property within the zone. Prior to entering into a tax abatement agreement, each entity must adopt guidelines and criteria for establishing tax abatement, which each entity will follow in granting tax abatement to owners of property. The tax abatement agreements may exempt from ad valorem taxation by each of the applicable taxing jurisdictions, including the District, for a period of up to ten (10) years, all or any part of any increase in the assessed valuation of property covered by the agreement over its assessed valuation in the year in which the agreement is executed, on the condition that the property owner make specified improvements or repairs to the property in conformity with the terms of the tax abatement. Each taxing jurisdiction has discretion to determine terms for its tax abatement agreements without regard to the terms approved by the other taxing jurisdictions. Valuation of Property for Taxation Generally, property in the District must be appraised by the Appraisal District at market value as of January 1 of each year. Once an appraisal roll is prepared and finally approved by the Appraisal Review Board, it is used by the District in establishing its tax rolls and tax rate. Generally, assessments under the Property Tax Code are to be based on one hundred percent (100%) of market value, as such is defined in the Property Tax Code. In determining market value, either the replacement cost or the income or the market data method of valuation may be used, whichever is appropriate. Nevertheless, certain land may be appraised at less than market value under the Property Tax Code. Increases in the appraised value of residence homesteads are limited by the Texas Constitution to 10 percent annually regardless of the market value of the property.

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The Property Tax Code permits land designated for agricultural use, open space, or timberland to be appraised at its value based on the land’s capacity to produce agricultural or timber products rather than at its market value. The Property Tax Code permits under certain circumstances that residential real property inventory held by a person in the trade or business be valued at the price all such property would bring if sold as a unit to a purchaser who would continue the business. Provisions of the Property Tax Code are complex and are not fully summarized here. Landowners wishing to avail themselves of the agricultural use, open space, or timberland designation or residential real property inventory designation must apply for the designation and the appraiser is required by the Property Tax Code to act on each claimant’s right to the designation individually. A claimant may waive the special valuation as to taxation by some political subdivisions while claiming it as to another. If a claimant receives the agricultural use designation and later loses it by changing the use of the property or selling it to an unqualified owner, the District can collect taxes based on the new use, including taxes for the previous three (3) years for agricultural use, open space land and timberland.

The Property Tax Code requires the Appraisal District to implement a plan for periodic reappraisal of property to update appraisal values. The plan must provide for appraisal of all real property in the Appraisal District at least once every three (3) years. It is not known what frequency of reappraisal will be utilized by the Appraisal District or whether reappraisals will be conducted on a zone or county-wide basis. The District, however, at its expense has the right to obtain from the Appraisal District a current estimate of appraised values within the District or an estimate of any new property or improvements within the District. While such current estimate of appraised values may serve to indicate the rate and extent of growth of taxable values within the District, it cannot be used for establishing a tax rate within the District until such time as the Appraisal District chooses formally to include such values on its appraisal roll.

The Property Tax Code provides for a temporary exemption from ad valorem taxation of a portion of the appraised value of certain property that is at least 15% damaged by a disaster and located within an area declared to be a disaster area by the governor of the State of Texas. This temporary exemption is automatic if the disaster is declared prior to a taxing unit, such as the District, adopting its tax rate for the tax year. A taxing unit, such as the District, may authorize the exemption at its discretion if the disaster is declared after the taxing unit has adopted its tax rate for the tax year. The amount of the exemption is based on the percentage of damage and is prorated based on the date of the disaster. Upon receipt of an application submitted within the eligible timeframe by a person who qualifies for a temporary exemption under the Property Tax Code, the Appraisal District is required to complete a damage assessment and assign a damage assessment rating to determine the amount of the exemption. The temporary exemption amounts established in the Property Tax Code range from 15% for property less than 30% damaged to 100% for property that is a total loss. Any such temporary exemption granted for disaster-damaged property expires on January 1 of the first year in which the property is reappraised. District and Taxpayer Remedies Under certain circumstances taxpayers and taxing units (such as the District) may appeal the orders of the Appraisal Review Board by filing a timely petition for review in State district court. In such event, the value of the property in question will be determined by the court or by a jury if requested by any party. Additionally, taxing units may bring suit against the Appraisal District to compel compliance with the Property Tax Code. The Property Tax Code also establishes a procedure for notice to property owners of reappraisals reflecting increased property value, appraisals which are higher than renditions, and appraisals of property not previously on an appraisal roll. Levy and Collection of Taxes The District is responsible for the levy and collection of its taxes unless it elects to transfer such functions to another governmental entity. The rate of taxation is set by the Board of Directors, after the legally required notice has been given to owners of property within the District, based upon: a) the valuation of property within the District as of the preceding January 1, and b) the amount required to be raised for debt service, maintenance purposes, and authorized contractual obligations. Taxes are due October 1, or when billed, whichever comes later, and become delinquent if not paid before February 1 of the year following the year in which imposed. A delinquent tax incurs a penalty of six percent (6%) of the amount of the tax for the first calendar month it is delinquent, plus one percent (1%) for each additional month or portion of a month the tax remains unpaid prior to July 1 of the year in which it becomes delinquent. If the tax is not paid by July 1 of the year in which it becomes delinquent, the tax incurs a total penalty of twelve percent (12%) regardless of the number of months the tax has been delinquent and incurs an additional penalty for collection costs of an amount established by the District and a delinquent tax attorney. A delinquent tax on personal property incurs an additional penalty, in an amount established by the District and a delinquent tax attorney, 60 days after the date the taxes become delinquent. The delinquent tax accrues interest at a rate of one percent (1%) for each month or portion of a month it remains unpaid. The Property Tax Code makes provisions for the split payment of taxes, discounts for early payment and the postponement of the delinquency date of taxes under certain circumstances which, at the option of the District, which may be rejected by taxing units. The District’s tax collector is required to enter into an installment payment agreement with any person who is delinquent on the payment of tax on a residence homestead for payment of tax, penalties and interest, if the person requests an installment agreement and has not entered into an installment agreement with the collector in the preceding 24 months. The installment agreement must provide for payments to be made in monthly installments and must extend for a period of at least 12 months and no more than 36

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months. Additionally, the owner of a residential homestead property who is (i) sixty-five (65) years of age or older, (ii) disabled, or (iii) a disabled veteran, is entitled by law to pay current taxes on a residential homestead in installments without penalty or to defer the payment of taxes during the time of ownership. In the instance of tax deferral, a tax lien remains on the property and interest continue to accrue during the period of deferral. Certain qualified taxpayers, including owners of residential homesteads, located within a natural disaster area and whose property has been damaged as a direct result of the disaster, are entitled to enter into a tax payment installment agreement with a taxing jurisdiction such as the District if the tax payer pays at least one-fourth of the tax bill imposed on the property by the delinquency date. The remaining taxes may be paid without penalty or interest in three equal installments within six months of the delinquency date. Rollback of Operation and Maintenance Tax Rate Chapter 49 of the Texas Water Code, as amended classifies districts differently based on the current operation and maintenance tax rate or on the percentage of build-out that the District has completed. Districts that have adopted an operation and maintenance tax rate for the current year that is 2.5 cents or less per $100 of taxable value are classified as "Special Taxing Units." Districts that have financed, completed, and issued bonds to pay for all improvements and facilities necessary to serve at least 95% of the projected build-out of the district are classified as "Developed Districts." Districts that do not meet either of the classifications previously discussed can be classified herein as "Developing Districts." The impact each classification has on the ability of a district to increase its maintenance and operations tax rate is described for each classification below. Debt service and contract tax rates cannot be reduced by a rollback election held within any of the districts described below. Special Taxing Units: Special Taxing Units that adopt a total tax rate that would impose more than1.08 times the amount of the total tax imposed by such district in the preceding tax year on a residence homestead appraised at the average appraised value of a residence homestead, subject to certain homestead exemptions, are required to hold an election within the district to determine whether to approve the adopted total tax rate. If the adopted total tax rate is not approved at the election, the total tax rate for a Special Taxing Unit is the current year's debt service and contract tax rate plus 1.08 times the previous year's operation and maintenance tax rate. Developed Districts: Developed Districts that adopt a total tax rate that would impose more than 1.035 times the amount of the total tax imposed by the district in the preceding tax year on a residence homestead appraised at the average appraised value of a residence homestead, subject to certain homestead exemptions for the preceding tax year, plus any unused increment rates, as calculated and described in Section 26.013 of the Tax Code, are required to hold an election within the district to determine whether to approve the adopted total tax rate. If the adopted total tax rate is not approved at the election, the total tax rate for a Developed District is the current year's debt service and contract tax rate plus 1.035 times the previous year's operation and maintenance tax rate plus any unused increment rates. In addition, if any part of a Developed District lies within an area declared for disaster by the Governor of Texas or President of the United States, alternative procedures and rate limitations may apply for a temporary period. If a district qualifies as both a Special Taxing Unit and a Developed District, the district will be subject to the operation and maintenance tax threshold applicable to Special Taxing Units. Developing Districts: Districts that do not meet the classification of a Special Taxing Unit or a Developed District can be classified as Developing Districts. The qualified voters of these districts, upon the Developing District's adoption of a total tax rate that would impose more than 1.08 times the amount of the total tax rate imposed by such district in the preceding tax year on a residence homestead appraised at the average appraised value of a residence homestead, subject to certain homestead exemptions, are authorized to petition for an election to reduce the operation and maintenance tax rate. If an election is called and passes, the total tax rate for Developing Districts is the current year's debt service and contract tax rate plus 1.08 times the previous year's operation and maintenance tax rate. The District: A determination as to a district’s status as a Special Taxing Unit, Developed District or Developing District will be made by the Board of Directors on an annual basis, beginning with the 2020 tax year. The District cannot give any assurances as to what its classification will be at any point in time or whether the District's future tax rates will result in a total tax rate that will reclassify the District into a new classification and new election calculation.

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District’s Rights in the Event of Tax Delinquencies Taxes levied by the District are a personal obligation of the owner of the property as of January 1 of the year for which the tax is imposed. On January 1 of each year, a tax lien attaches to property to secure the payment of all state and local taxes, penalties, and interest ultimately imposed for the year on the property. The lien exists in favor of the State of Texas and each local taxing unit, including the District, having power to tax the property. The District’s tax lien is on a parity with tax liens of such other taxing units. See “ESTIMATED OVERLAPPING DEBT STATEMENT—Overlapping Tax Rates for 2019.” A tax lien on real property takes priority over the claim of most creditors and other holders of liens on the property encumbered by the tax lien, whether or not the debt or lien existed before the attachment of the tax lien; however, whether a lien of the United States is on a parity with or takes priority over a tax lien of the District is determined by applicable federal law. Personal property under certain circumstances is subject to seizure and sale for the payment of delinquent taxes, penalty, and interest. At any time after taxes on property become delinquent, the District may file suit to foreclose the lien securing payment of the tax, to enforce personal liability for the tax, or both subject to the restrictions on residential homesteads described above under “Levy and Collection of Taxes.” In filing a suit to foreclose a tax lien on real property, the District must join other taxing units that have claims for delinquent taxes against all or part of the same property. Collection of delinquent taxes may be adversely affected by the cost of suit and sale, by the amount of taxes owed to other taxing units, by the effects of market conditions on the foreclosure sale price, by taxpayer redemption rights (a taxpayer may redeem property within six (6) months for commercial property and two (2) years for residential and all other types of property after the purchaser’s deed issued at the foreclosure sale is filed in the county records) or by bankruptcy proceedings which restrict the collection of taxpayer debts. The District’s ability to foreclose its tax lien or collect penalties or interest on delinquent taxes may be limited on property owned by a financial institution which is under receivership by the Federal Deposit Insurance Corporation pursuant to the Federal Deposit Insurance Act, 12 U.S.C. 1825, as amended. See “RISK FACTORS.”

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GENERAL FUND General The Bonds are payable from the levy of an ad valorem tax, without legal limitation as to rate or amount, upon all taxable property in the District. Surplus revenues, if any, of the District’s general fund are not pledged to the payment of the Bonds but are available for any lawful purpose including payment of debt service on the Bonds, at the discretion and upon action of the Board. It is not anticipated that any significant revenues will be available for the payment of debt service on the Bonds. Operating Statement The following statement sets forth in condensed form the historical results of operation of the District’s General Fund. The City operates the water and sewer system that serves the District, so the District collects no net revenues from operating the System. Such summary is based upon information obtained from the District’s initial audited financial statements for fiscal year June 30, 2019 and an unaudited summary for fiscal year ending June 30, 2020 prepared by the District’s Bookkeeper. Reference is made to such statements and records for further and more complete information. See “RISK FACTORS—Operating Funds.”

(a) Unaudited. Prepared by the District ‘s Bookkeeper. (b) Initial year of audit.

2020 (a) 2019 (b) 2018 (a)Revenues

Property Taxes 300,000$ -$ -$ Investment Earnings 15 21 7 Total Revenues 300,015$ 21$ 7$

ExpendituresProfessional Fees 41,153$ 36,291$ 76,211$ Contracted Services 14,328 14,307 9,722 Administrative 7,239 6,384 7,658 Total Expenditures 62,720$ 56,982$ 93,591$

Revenues Over (Under) Expenditures 237,295$ (56,961)$ (93,584)$

Other SourcesDeveloper Advances 11,000 60,000 77,000

Fund Balance (Beginning of Year) (13,545)$ (16,584)$ -$

Fund Balance (End of Year) 234,750$ (13,545)$ (16,584)$

Fiscal Year Ended June 30

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DEBT SERVICE REQUIREMENTS The following table sets forth the estimated debt service requirements for the Bonds at an assumed interest rate of 4.00% per annum.

Average Annual Debt Service Requirements (2022-2045) ............................................................................................. $402,421 Maximum Annual Debt Service Requirements (2030) .................................................................................................. $405,600

Year Principal Interest Total

2021 248,600$ 248,600$ 2022 160,000$ 245,400 405,400 2023 165,000 238,900 403,900 2024 170,000 232,200 402,200 2025 180,000 225,200 405,200 2026 185,000 217,900 402,900 2027 195,000 210,300 405,300 2028 200,000 202,400 402,400 2029 210,000 194,200 404,200 2030 220,000 185,600 405,600 2031 225,000 176,700 401,700 2032 235,000 167,500 402,500 2033 245,000 157,900 402,900 2034 255,000 147,900 402,900 2035 265,000 137,500 402,500 2036 275,000 126,700 401,700 2037 285,000 115,500 400,500 2038 300,000 103,800 403,800 2039 310,000 91,600 401,600 2040 320,000 79,000 399,000 2041 335,000 65,900 400,900 2042 350,000 52,200 402,200 2043 365,000 37,900 402,900 2044 375,000 23,100 398,100 2045 390,000 7,800 397,800

Total 6,215,000$ 3,691,700$ 9,906,700$

Debt Service on the Bonds

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LEGAL MATTERS Legal Proceedings Delivery of the Bonds will be accompanied by the unqualified approving legal opinion of the Attorney General of Texas to the effect that the Bonds are valid and legally binding obligations of the District under the Constitution and laws of the State of Texas payable from the proceeds of an annual ad valorem tax levied by the District, without limit as to rate or amount, upon all taxable property within the District, and, based upon their examination of a transcript of certified proceedings relating to the issuance and sale of the Bonds, the approving legal opinion of Allen Boone Humphries Robinson LLP, Bond Counsel, to a like effect and to the effect that, under existing law, interest on the Bonds is excludable from gross income for federal income tax purposes and interest on the Bonds is not subject to the alternative minimum tax on individuals. Bond Counsel has reviewed the information appearing in this Official Statement under “THE BONDS,” “THE DISTRICT—General, Utility Functions and Services Allocation Agreement with the City of Baytown” “THE WATER SUPPLY AND WASTEWATER TREATMENT SYSTEM—Water Supply and Wastewater Treatment,” “TAX PROCEDURES,” “LEGAL MATTERS,” “TAX MATTERS,” and “CONTINUING DISCLOSURE OF INFORMATION” solely to determine if such information, insofar as it relates to matters of law, is true and correct, and whether such information fairly summarizes the provisions of the documents referred to therein. Bond Counsel has not, however, independently verified any of the factual information contained in this Official Statement nor has it conducted an investigation of the affairs of the District for the purpose of passing upon the accuracy or completeness of this Official Statement. No person is entitled to rely upon Bond Counsel’s limited participation as an assumption of responsibility for or an expression of opinion of any kind with regard to the accuracy or completeness of any information contained herein. Allen Boone Humphries Robinson LLP also serves as General Counsel to the District on matters other than the issuance of bonds. The legal fees paid to Bond Counsel for services rendered in connection with the issuance of the Bonds are based on a percentage of the bonds actually issued, sold, and delivered and, therefore, such fees are contingent upon the sale and delivery of the Bonds. The legal fees paid to Allen Boone Humphries Robinson LLP in its capacity as General Counsel are based on time charges actually incurred. The various legal opinions to be delivered concurrently with the delivery of the Bonds express the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. In rendering a legal opinion, the attorney does not become an insurer or guarantor of the expression of professional judgment, of the transaction opined upon, or of the future performance of the parties to the transaction, nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction. No Material Adverse Change The obligations of the Underwriter to take and pay for the Bonds, and of the District to deliver the Bonds, are subject to the condition that, up to the time of delivery of and receipt of payment for the Bonds, there shall have been no material adverse change in the condition (financial or otherwise) of the District from that set forth or contemplated in the Preliminary Official Statement. No-Litigation Certificate The District will furnish the Underwriter a certificate, executed by both the President and Secretary of the Board, and dated as of the date of delivery of the Bonds, to the effect that there is not pending, and to their knowledge, there is not threatened, any litigation affecting the validity of the Bonds, or the levy and/or collection of taxes for the payment thereof, or the organization or boundaries of the District, or the title of the officers thereof to their respective offices, and that no additional bonds or other indebtedness have been issued since the date of the statement of indebtedness or nonencumbrance certificate submitted to the Attorney General of Texas in connection with approval of the Bonds.

TAX MATTERS In the opinion of Allen Boone Humphries Robinson LLP, Bond Counsel, under existing law, interest on the Bonds is excludable from gross income for federal income tax purposes and interest on the Bonds is not subject to the alternative minimum tax on individuals. The Internal Revenue Code of 1986, as amended (the “Code”) imposes a number of requirements that must be satisfied for interest on state or local obligations, such as the Bonds, to be excludable from gross income for federal income tax purposes. These requirements include limitations on the use of proceeds and the source of repayment limitations on the investment of proceeds prior to expenditure, a requirement that excess arbitrage earned on the investment of proceeds be paid periodically to the United States and a requirement that the issuer file an information report with the Internal Revenue Service (the “Service”). The District has covenanted in the Bond Resolution that it will comply with these requirements.

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Bond Counsel’s opinion will assume continuing compliance with the covenants of the Bond Resolution pertaining to those sections of the Code which affect the exclusion from gross income of interest on the Bonds for federal income tax purposes and, in addition, will rely on representations by the District, the District’s Financial Advisor and the Underwriter with respect to matters solely within the knowledge of the District, the District’s Financial Advisor and the Underwriter, respectively, which Bond Counsel has not independently verified. If the District should fail to comply with the covenants in the Bond Resolution or if the foregoing representations should be determined to be inaccurate or incomplete, interest on the Bonds could become taxable from the date of delivery of the Bonds, regardless of the date on which the event causing such taxability occurs. Under the Code, taxpayers are required to report on their returns the amount of tax-exempt interest, such as interest on the Bonds, received or accrued during the year. Payments of interest on tax-exempt obligations such as the Bonds are in many cases required to be reported to the Service. Additionally, backup withholding may apply to any such payments to any owner who is not an “exempt recipient” and who fails to provide certain identifying information. Individuals generally are not exempt recipients, whereas corporations and certain other entities generally are exempt recipients. Prospective purchasers of the Bonds should be aware that the ownership of tax exempt obligations may result in collateral federal income tax consequences to financial institutions, life insurance and property and casualty insurance companies, certain S corporations with Subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits, taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax exempt obligations, taxpayers owning an interest in a FASIT that holds tax-exempt obligations, and individuals otherwise qualifying for the earned income credit. In addition, certain foreign corporations doing business in the United States may be subject to the “branch profits tax” on their effectively-connected earnings and profits, including tax exempt interest such as interest on the Bonds. These categories of prospective purchasers should consult their own tax advisors as to the applicability of these consequences. Bond Counsel’s opinions are based on existing law, which is subject to change. Such opinions are further based on Bond Counsel’s knowledge of facts as of the date hereof. Bond Counsel assumes no duty to update or supplement its opinions to reflect any facts or circumstances that may thereafter come to Bond Counsel’s attention or to reflect any changes in any law that may thereafter occur or become effective. Moreover, Bond Counsel’s opinions are not a guarantee of result and are not binding on the Service; rather, such opinions represent Bond Counsel’s legal judgment based upon its review of existing law and in reliance upon the representations and covenants referenced above that it deems relevant to such opinions. The Service has an ongoing audit program to determine compliance with rules that relate to whether interest on state or local obligations is includable in gross income for federal income tax purposes. No assurance can be given whether or not the Service will commence an audit of the Bonds. If an audit is commenced, in accordance with its current published procedures the Service is likely to treat the District as the taxpayer and the owners of the Bonds may not have a right to participate in such audit. Public awareness of any future audit of the Bonds could adversely affect the value and liquidity of the Bonds during the pendency of the audit regardless of the ultimate outcome of the audit. Tax Accounting Treatment of Original Issue Discount Bonds The issue price of certain of the Bonds (the “Original Issue Discount Bonds”) may be less than the stated redemption price at maturity. In such case, under existing law, and based upon the assumptions hereinafter stated (a) the difference between (i) the stated amount payable at the maturity of each Original Issue Discount Bond and (ii) the issue price of such Original Issue Discount Bond constitutes original issue discount with respect to such Original Issue Discount Bond in the hands of any owner who has purchased such Original Issue Discount Bond at the initial public offering price in the initial public offering of the Bonds; and (b) such initial owner is entitled to exclude from gross income (as defined in Section 61 of the Code) an amount of income with respect to such Original Issue Discount Bond equal to that portion of the amount of such original issue discount allocable to the period that such Original Issue Discount Bond continues to be owned by such owner. In the event of the redemption, sale or other taxable disposition of such Original Issue Discount Bond prior to stated maturity, however, the amount realized by such owner in excess of the basis of such Original Issue Discount Bond in the hands of such owner (adjusted upward by the portion of the original issue discount allocable to the period for which such Bond was held by such initial owner) is includable in gross income. (Because original issue discount is treated as interest for federal income tax purposes, the discussion regarding interest on the Bonds under the caption “TAX MATTERS” generally applies, except as otherwise provided below, to original issue discount on an Original Issue Discount Bond held by an owner who purchased such Bond at the initial offering price in the initial public offering of the Bonds, and should be considered in connection with the discussion in this portion of the Official Statement.) The foregoing is based on the assumptions that (a) the Underwriter has purchased the Bonds for contemporaneous sale to the general public and not for investment purposes , and (b) all of the Original Issue Discount Bonds have been offered, and a substantial amount of each maturity thereof has been sold, to the general public in arm’s-length transactions for a cash price (and with no other consideration being included) equal to the initial offering prices thereof stated on the cover page of this Official Statement, and (c) the respective initial offering prices of the Original Issue Discount Bonds to the general public are equal to the fair market value thereof. Neither the District nor Bond Counsel warrants that the Original Issue Discount Bonds will be offered and sold in accordance with such assumptions.

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Under existing law, the original issue discount on each Original Issue Discount Bond is accrued daily to the stated maturity thereof (in amounts calculated as described below for each six-month period ending on the date before the semiannual anniversary dates of the Bonds and ratably within each such six-month period) and the accrued amount is added to an initial owner’s basis for such Bond for purposes of determining the amount of gain or loss recognized by such owner upon redemption, sale or other disposition thereof. The amount to be added to basis for each accrual period is equal to (a) the sum of the issue price plus the amount of original issue discount accrued in prior periods multiplied by the yield to stated maturity (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period) less (b) the amounts payable as current interest during such accrual period on such Bond. The federal income tax consequences of the purchase, ownership, and redemption, sale or other disposition of Original Issue Discount Bonds which are not purchased in the initial offering at the initial offering price may be determined according to rules which differ from those described above. All owners of Original Issue Discount Bonds should consult their own tax advisors with respect to the determination for federal, state and local income tax purposes of interest accrued upon redemption, sale or other disposition of such Bonds and with respect to the federal, state, local and foreign tax consequences of the purchase, ownership and redemption, sale or other disposition of such Bonds. Qualified Tax-Exempt Obligations The Code requires a pro rata reduction in the interest expense deduction of a financial institution to reflect such financial institution’s investment in tax-exempt obligations acquired after August 7, 1986. An exception to the foregoing provision is provided in the Code for “qualified tax-exempt obligations,” which include tax-exempt obligations, such as the Bonds, (a) designated by the issuer as “qualified tax-exempt obligations” and (b) issued by or on behalf of a political subdivision for which the aggregate amount of tax-exempt obligations (not including private activity bonds other than qualified 501(c)(3) bonds) to be issued during the calendar year is not expected to exceed $10,000,000. The District has designated the Bonds as “qualified tax-exempt obligations” and will represent that the aggregate amount of tax-exempt bonds (including the Bonds) issued by the District and entities aggregated with the District under the Code during calendar year 2020 is not expected to exceed $10,000,000 and that the District and entities aggregated with the District under the Code have not designated more than $10,000,000 in “qualified tax-exempt obligations” (including the Bonds) during calendar year 2020. Notwithstanding these exceptions, financial institutions acquiring the Bonds will be subject to a 20% disallowance of allocable interest expense.

SALE AND DISTRIBUTION OF THE BONDS Award of the Bonds After requesting competitive bids for the Bonds, the District accepted the bid resulting in the lowest net interest cost, which bid was tendered by __________(the “Underwriter”) bearing the interest rates shown on the cover page hereof, at a price of __________% of the principal amount thereof plus accrued interest to the date of delivery which resulted in a net effective interest rate of __________% as calculated pursuant to Chapter 1204 of the Texas Government Code. Prices and Marketability The prices and other terms with respect to the offering and sale of the Bonds may be changed at any time by the Underwriter after the Bonds are released for sale, and the Bonds may be offered and sold at prices other than the initial offering prices, including sales to dealers who may sell the Bonds into investment accounts. In connection with the offering of the Bonds, the Underwriter may over-allot or effect transactions that stabilize or maintain the market prices of the Bonds at levels above those that might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. The District has no control over trading of the Bonds in the secondary market. Moreover, there is no guarantee that a secondary market will be made in the Bonds. In such a secondary market, the difference between the bid and asked price of utility district bonds may be greater than the difference between the bid and asked price of bonds of comparable maturity and quality issued by more traditional municipal entities, as bonds of such entities are more generally bought, sold, or traded in the secondary market.

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Securities Laws No registration statement relating to the offer and sale of the Bonds has been filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, in reliance upon the exemptions provided thereunder. The Bonds have not been registered or qualified under the Securities Act of Texas in reliance upon various exemptions contained therein; nor have the Bonds been registered or qualified under the securities laws of any other jurisdiction. The District assumes no responsibility for registration or qualification of the Bonds under the securities laws of any other jurisdiction in which the Bonds may be offered, sold or otherwise transferred. This disclaimer of responsibility for registration or qualification for sale or other disposition of the Bonds shall not be construed as an interpretation of any kind with regard to the availability of any exemption from securities registration or qualification provisions in such other jurisdiction.

PREPARATION OF OFFICIAL STATEMENT Sources and Compilation of Information The financial data and other information contained in this Official Statement has been obtained primarily from the District’s records, the Developer, the Engineer, the Tax Assessor/Collector, the Appraisal District and information from certain other sources. All of these sources are believed to be reliable, but no guarantee is made by the District as to the accuracy or completeness of the information derived from sources other than the District, and its inclusion herein is not to be construed as a representation on the part of the District except as described below under “Certification of Official Statement.” Furthermore, there is no guarantee that any of the assumptions or estimates contained herein will be realized. The summaries of the agreements, reports, statutes, resolutions, engineering and other related information set forth in this Official Statement are included herein subject to all of the provisions of such documents. These summaries do not purport to be complete statements of such provisions, and reference is made to such documents for further information. Financial Advisor Masterson Advisors LLC, is employed as the Financial Advisor to the District to render certain professional services, including advising the District on a plan of financing and preparing the Official Statement, including the Official Notice of Sale and the Official Bid Form for the sale of the Bonds. In its capacity as Financial Advisor, Masterson Advisors LLC, has compiled and edited this Official Statement. In addition to compiling and editing, the Financial Advisor has obtained the information set forth herein under the caption indicated from the following sources:

“THE DISTRICT” – Fuller Thompson Ten, Ltd. (“Developer”), Culp Engineering, LLC (“Engineer”), and Records of the District (“Records”); “THE DEVELOPER” – Developer; “THE WATER SUPPLY AND WASTEWATER TREATMENT SYSTEM” - Engineer; “UNLIMITED TAX BONDS AUTHORIZED BUT UNISSUED” - Records; “FINANCIAL STATEMENT” - Harris County Appraisal District and B&A Municipal Tax Service, LLC, Tax Assessor/Collector; “ESTIMATED OVERLAPPING DEBT STATEMENT” - Municipal Advisory Council of Texas and Financial Advisor; “TAX DATA” – B&A Municipal Tax Service, LLC; “MANAGEMENT” - District Records; “DEBT SERVICE REQUIREMENTS” - Financial Advisor; “THE BONDS,” “TAX PROCEDURES,” and “LEGAL MATTERS” - Allen Boone Humphries Robinson LLP.

The Financial Advisor has provided the following sentence for inclusion in this Official Statement. The Financial Advisor has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to the District and, as applicable, to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Financial Advisor does not guarantee the accuracy or completeness of such information. Consultants In approving this Official Statement, the District has relied upon the following consultants. Engineer: The information contained in this Official Statement relating to engineering matters and to the description of the System and in particular that information included in the sections entitled “THE DISTRICT” and “THE WATER SUPPLY AND WASTEWATER TREATMENT SYSTEM” has been provided by Culp Engineering, LLC, Consulting Engineers and has been included herein in reliance upon the authority of said firm as experts in the field of civil engineering. Appraisal District: The information contained in this Official Statement relating to the assessed valuations has been provided by the Harris County Appraisal District and has been included herein in reliance upon the authority of such entity as experts in assessing the values of property in Harris County, including the District.

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Tax Assessor/Collector: The information contained in this Official Statement relating to the historical breakdown of the Assessed Valuations, principal taxpayers, and certain other historical data concerning tax rates and tax collections has been provided by B&A Municipal Tax Service, LLC, and is included herein in reliance upon her authority as an expert in assessing and collecting taxes. Auditor: The District’s financial statements for the fiscal year ending June 30, 2019 were audited by McGrath & Co., PLLC. See APPENDIX A for a copy of the District’s audited financial statements for the fiscal year ended June 30, 2019. Bookkeeper: The information related to the “unaudited” summary of the District’s General Operating Fund as it appears in “GENERAL FUND” has been prepared by F Matuska, Inc. and is included herein in reliance upon the authority of such firm as experts in the tracking and managing the various funds of municipal utility districts. Updating the Official Statement If, subsequent to the date of the Official Statement, the District learns, through the ordinary course of business and without undertaking any investigation or examination for such purposes, or is notified by the Underwriter, of any adverse event which causes the Official Statement to be materially misleading, and unless the Underwriter elects to terminate its obligation to purchase the Bonds, the District will promptly prepare and supply to the Underwriter an appropriate amendment or supplement to the Official Statement satisfactory to the Underwriter; provided, however, that the obligation of the District to so amend or supplement the Official Statement will terminate when the District delivers the Bonds to the Underwriter, unless the Underwriter notifies the District on or before such date that less than all of the Bonds have been sold to ultimate customers, in which case the District’s obligations hereunder will extend for an additional period of time as required by law (but not more than 90 days after the date the District delivers the Bonds). Certification of Official Statement The District, acting through its Board of Directors in its official capacity, hereby certifies, as of the date hereof, that the information, statements, and descriptions or any addenda, supplement and amendment thereto pertaining to the District and its affairs contained herein, to the best of its knowledge and belief, contain no untrue statement of a material fact and do not omit to state any material fact necessary to make the statements herein, in light of the circumstances under which they are made, not misleading. With respect to information included in this Official Statement other than that relating to the District, the District has no reason to believe that such information contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein, in the light of the circumstances under which they are made, not misleading; however, the Board has made no independent investigation as to the accuracy or completeness of the information derived from sources other than the District. In rendering such certificate, the official executing this certificate may state that he has relied in part on his examination of records of the District relating to matters within his own area of responsibility, and his discussions with, or certificates or correspondence signed by, certain other officials, employees, consultants and representatives of the District.

CONTINUING DISCLOSURE OF INFORMATION The offering of the Bonds qualifies for the Rule 15c2-12(d)(2) exemption from Rule 15c2-12(b)(5) of the United States Securities and Exchange Commission (the “SEC”) regarding the District’s continuing disclosure obligations because the District does not have more than $10,000,000 in aggregate amount of bonds outstanding and no person is committed by contract or other arrangement with respect to payment of the Bonds; accordingly, in the Bond Resolution, the District has made the following agreement for the benefit of the registered holders and beneficial owners of the Bonds. The District is required to observe the agreement for so long as it remains obligated to advance funds to pay the Bonds. Under the agreement, the District will be obligated to provide certain financial information and operating data annually, and timely notice of specified events, to the Municipal Securities Rulemaking Board (“MSRB”). The MSRB has established the Electronic Municipal Market Access (“EMMA”) system. Annual Reports The District will provide certain financial information and operating data which is customarily prepared by the District and publicly available annually to the MSRB. The information to be updated with respect to the District includes all quantitative financial information and operating data of the general type included in “APPENDIX A (District’s Audited Financial Statements)”. The District will update and provide this information within six months after the end of each of its fiscal years ending in or after 2020. Any information concerning the District so provided shall be prepared in accordance with generally accepted auditing standards or other such principles as the District may be required to employ from time to time pursuant to state law or regulation, and audited if the audit report is completed within the period during which it must be provided. If the audit report of the District is not complete within such period, then the District shall provide unaudited financial statements for the fiscal year to the MSRB within such six-month period and audited financial statements when the audit report becomes available. The District’s current fiscal year end is June 30. Accordingly, it must provide updated information by December 31 in each year, unless the District changes its fiscal year. If the District changes its fiscal year, it will notify the MSRB of the change.

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Specified Event Notices The District will provide timely notices of certain specified events to the MSRB, but in no event will such notices be provided to the MSRB in excess of ten business days after the occurrence of an event. The District will provide notice of any of the following events with respect to the Bonds: (1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; (7) modifications to rights of beneficial owners of the Bonds, if material; (8) bond calls, if material, and tender offers; (9) defeasances; (10) release, substitution, or sale of property securing repayment of the Bonds, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership or similar event of the District or other obligated person; (13) consummation of a merger, consolidation, or acquisition involving the District or other obligated person or the sale of all or substantially all of the assets of the District or other obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; (14) appointment of a successor or additional trustee or the change of name of a trustee, if material; (15) incurrence of a financial obligation of the District or other obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the District or other obligated person, any of which affect Beneficial Owners of the Bonds, if material; and (16) default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the District or other obligated person, any of which reflect financial difficulties. The terms “obligated person” and “financial obligation” when used in this paragraph shall have the meanings ascribed to them under SEC Rule 15c2-12 (the “Rule”). The term “material” when used in this paragraph shall have the meaning ascribed to it under federal securities laws. Neither the Bonds nor the Bond Resolution makes any provision for debt service reserves or liquidity enhancement. In addition, the District will provide timely notice of any failure by the District to provide financial information, operating data, or financial statements in accordance with its agreement described above under “Annual Reports.” Availability of Information from MSRB The District has agreed to provide the foregoing information only to the MSRB. The MSRB makes the information available to the public without charge through the EMMA internet portal at www.emma.msrb.org. Limitations and Amendments The District has agreed to update information and to provide notices of specified events only as described above. The District has not agreed to provide other information that may be relevant or material to a complete presentation of its financial results of operations, condition, or prospects or agreed to update any information that is provided, except as described above. The District makes no representation or warranty concerning such information or concerning its usefulness to a decision to invest in or sell Bonds at any future date. The District disclaims any contractual or tort liability for damages resulting in whole or in part from any breach of its continuing disclosure agreement or from any statement made pursuant to its agreement, although Registered or Beneficial Owners of Bonds may seek a writ of mandamus to compel the District to comply with its agreement. The District may amend its continuing disclosure agreement from time to time to adapt the changed circumstances that arise from a change in legal requirements, a change in law, or a change in the identity, nature, status, or type of operations of the District, if but only if the agreement, as amended, would have permitted an underwriter to purchase or sell Bonds in the offering made hereby in compliance with the Rule, taking into account any amendments or interpretations of the Rule to the date of such amendment, as well as such changed circumstances, and either the holders of a majority in aggregate principal amount of the outstanding Bonds consent to the amendment or any person unaffiliated with the District (such as nationally recognized bond counsel) determines that the amendment will not materially impair the interests of the Registered and Beneficial Owners of the Bonds. The District may amend or repeal the agreement in the Bond Resolution if the SEC amends or repeals the applicable provisions of the Rule or a court of final jurisdiction determines that such provisions are invalid or unenforceable, but only to the extent that its right to do so would not prevent the Underwriter from lawfully purchasing the Bonds in the initial offering. If the District so amends the agreement, it has agreed to include with any financial information or operating data next provided in accordance with its agreement described above under “Annual Reports” an explanation, in narrative form, of the reasons for the amendment and of the impact of any change in the type of financial information and operating data so provided. Compliance with Prior Undertakings The District has not previously entered into a continuing disclosure undertaking agreement.

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MISCELLANEOUS

All estimates, statements and assumptions in this Official Statement and the Appendix hereto have been made on the basis of the best information available and are believed to be reliable and accurate. Any statements in this Official Statement involving matters of opinion or estimates, whether or not expressly so stated, are intended as such and not as representations of fact, and no representation is made that any such statements will be realized. This Official Statement was approved by the Board of Directors of Harris County Municipal Utility District No. 473, as of the date shown on the cover page.

/s/ President, Board of Directors Harris County Municipal Utility District No. 473

ATTEST:

/s/ Secretary, Board of Directors Harris County Municipal Utility District No. 473

AERIAL PHOTOGRAPH (Approximate boundaries of the District as of June 2020)

PHOTOGRAPHS OF THE DISTRICT (Taken June 2020)

 

 

 

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MUNICIPAL UTILITY DISTRICT NO. 473

 

 

 

 

 

 

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APPENDIX A

District Audited Financial Statements for the fiscal year ended June 30, 2019

HARRIS COUNTY MUNICIPAL UTILITY DISTRICT NO. 473

HARRIS COUNTY, TEXAS

FINANCIAL REPORT

June 30, 2019

Table of Contents

Schedule Page Independent Auditors’ Report 1 Management’s Discussion and Analysis 5 BASIC FINANCIAL STATEMENTS Statement of Net Position and Governmental Fund Balance Sheet 12 Statement of Activities and Governmental Fund Revenues, Expenditures

and Changes in Fund Balance

13 Notes to Basic Financial Statements 15 REQUIRED SUPPLEMENTARY INFORMATION Budgetary Comparison Schedule – General Fund 24 Notes to Required Supplementary Information 25 TEXAS SUPPLEMENTARY INFORMATION Services and Rates TSI-1 28 General Fund Expenditures TSI-2 30 Investments TSI-3 N/A Taxes Levied and Receivable TSI-4 N/A Long-Term Debt Service Requirements by Years TSI-5 N/A Change in Long-Term Bonded Debt TSI-6 N/A Comparative Schedule of Revenues and Expenditures – General Fund TSI-7a 31 Comparative Schedule of Revenues and Expenditures – Debt Service Fund TSI-7b N/A Board Members, Key Personnel and Consultants TSI-8 32

McGRATH & CO., PLLC Certified Public Accountants

2500 Tanglewilde, Suite 340 Houston, Texas 77063

Mark W. McGrath, CPA mark@mcgrath-co.com

Colette M. Garcia, CPA colette@mcgrath-co.com

Tayo Ilori, CPA, CFE tayo@mcgrath-co.com

Crystal V. Horn, CPA crystal@mcgrath-co.com

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Independent Auditors’ Report Board of Directors Harris County Municipal Utility District No. 473 Harris County, Texas We have audited the accompanying financial statements of the governmental activities and General Fund of Harris County Municipal Utility District No. 473, as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these basic financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the basic financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting principles used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient to provide a basis for our audit opinions.

Board of Directors Harris County Municipal Utility District No. 473 Harris County, Texas

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Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and General Fund of Harris County Municipal Utility District No. 473, as of June 30, 2019, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District’s basic financial statements. The Texas Supplementary Information is presented for purposes of additional analysis and is not a required part of the basic financial statements. The Texas Supplementary Information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied to the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements taken as a whole.

Houston, Texas October 17, 2019

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Management’s Discussion and Analysis

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Harris County Municipal Utility District No. 473 Management’s Discussion and Analysis June 30, 2019

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Using this Annual Report Within this section of the financial report of Harris County Municipal Utility District No. 473 (the “District”), the District’s Board of Directors provides a narrative discussion and analysis of the financial activities of the District for the fiscal year ended June 30, 2019. This analysis should be read in conjunction with the independent auditors’ report and the basic financial statements that follow this section. In addition to this discussion and analysis, this annual report consists of:

The District’s basic financial statements; Notes to the basic financial statements, which provide additional information essential to a

full understanding of the data provided in the financial statements; Supplementary information required by the Governmental Accounting Standards Board

(GASB) concerning the District’s budget; and Other Texas supplementary information required by the District’s state oversight agency, the

Texas Commission on Environmental Quality (TCEQ). Overview of the Financial Statements The District prepares its basic financial statements using a format that combines fund financial statements and government-wide statements onto one financial statement. The combined statements are the Statement of Net Position and Governmental Fund Balance Sheet and the Statement of Activities and Governmental Fund Revenues, Expenditures and Changes in Fund Balance. Each statement contains an adjustments column which quantifies the differences between the government-wide and fund level statements. Additional details of the adjustments are provided in Note 2 to the basic financial statements. Government-Wide Financial Statements The focus of government-wide financial statements is on the overall financial position and activities of the District, both long-term and short-term. The District’s government-wide financial statements consist of the Statement of Net Position and the Statement of Activities, which are prepared using the accrual basis of accounting. The Statement of Net Position includes all of the District’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources with the residual reported as net position. Over time, changes in net position may provide a useful indicator of whether the financial position of the District as a whole is improving or deteriorating. Accounting standards establish three components of net position. The net investment in capital assets component represents the District’s investments in capital assets, less any outstanding debt or other borrowings used to acquire those assets. Resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The restricted component of net position consists of financial resources that are restricted for a specific purpose by enabling legislation or external parties. The unrestricted component of net position represents resources not included in the other components.

Harris County Municipal Utility District No. 473 Management’s Discussion and Analysis June 30, 2019

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The Statement of Activities reports how the District’s net position has changed during the fiscal year. All revenues and expenses are included on this statement, regardless of whether cash has been received or paid. Fund Financial Statements The fund financial statements include the Governmental Fund Balance Sheet and the Governmental Fund Revenues, Expenditures and Changes in Fund Balance. The focus of fund financial statements is on specific activities of the District rather than the District as a whole, reported using modified accrual accounting. These statements report on the District’s use of available financial resources and the balances of available financial resources at the end of the year. Except for the General Fund, a specific fund is established to satisfy managerial control over resources or to satisfy finance-related legal requirements established by external parties, governmental statutes or regulations. For further discussion on the government-wide and fund financial statements, please refer to Note 1 in the financial statements. Financial Analysis of the District as a Whole The District’s net position at June 30, 2019, was negative $4,781,724. The District’s net position is negative because the District incurs debt to construct water, sewer and certain drainage facilities which it conveys to the City of Baytown and relies on advances from its developer to fund operating costs. A comparative summary of the District’s overall financial position, as of June 30, 2019 and 2018, is as follows:

2019 2018Current and other assets 9,086$ 1,769$ Capital assets 1,310,729 1,320,248

Total assets 1,319,815 1,322,017

Current liabilities 22,631 18,353 Long-term liabilities 6,078,908 4,138,940

Total liabilities 6,101,539 4,157,293

Net positionNet investment in capital assets (47,595) (38,076) Unrestricted (4,734,129) (2,797,200) Total net position (4,781,724)$ (2,835,276)$

Harris County Municipal Utility District No. 473 Management’s Discussion and Analysis June 30, 2019

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The total net position of the District decreased during the current fiscal year by $1,946,448. A comparative summary of the District’s Statement of Activities for the current and prior fiscal year (unaudited) is as follows:

2019 2018Revenues

Investment earnings 21$ 7$ Total revenues 21 7

ExpensesOperating and administrative 56,982 93,591 Depreciation 9,519 38,076

Total expenses 66,501 131,667

Change in net position before other item (66,480) (131,660)

Other itemTransfers to other governments (1,879,968) (2,703,616)

Change in net position (1,946,448) (2,835,276) Net position, beginning of year (2,835,276) Net position, end of year (4,781,724)$ (2,835,276)$

Financial Analysis of the District’s General Fund Fund balance in the District’s General Fund, as of June 30, 2019, was negative $13,545. A comparative summary of the General Fund’s financial position as of June 30, 2019 and 2018 is as follows:

2019 2018

Total assets 9,086$ 1,769$

Total liabilities 22,631$ 18,353$ Total fund balance (13,545) (16,584) Total liabilities and fund balance 9,086$ 1,769$

A comparative summary of the General Fund’s activities for the current and prior fiscal year (unaudited) is as follows:

2019 2018Total revenues 21$ 7$ Total expenditures (56,982) (93,591) Revenues under expenditures (56,961) (93,584) Other changes in fund balance 60,000 77,000Net change in fund balance 3,039$ (16,584)$

Harris County Municipal Utility District No. 473 Management’s Discussion and Analysis June 30, 2019

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During the current and prior fiscal year, the District’s primary financial resources in the General Fund are from developer advances. Fund balance in the District’s General Fund is the result of timing differences between developer operating advances and the expenditures for which those advances are intended to fund. General Fund Budgetary Highlights The Board of Directors adopts an annual unappropriated budget for the General Fund prior to the beginning of each fiscal year. The Board did not amend the budget during the fiscal year. Since the District’s budget is primarily a planning tool, actual results varied from the budgeted amounts. Actual net change in fund balance was $3,039 greater than budgeted. The Budgetary Comparison Schedule on page 24 of this report provides variance information per financial statement line item. Capital Assets The District has entered into a financing agreement with its developer for the financing of the construction of capital assets within the District. The developer will be reimbursed from proceeds of future bond issues or other lawfully available funds. These developer funded capital assets are recorded on the District’s financial statements upon completion of construction. Capital assets held by the District at June 30, 2019 and 2018 are summarized as follows:

2019 2018Capital assets not being depreciated

Land and improvements 929,980$ 929,980$

Capital assets being depreciatedStormwater detention facilities 428,344 428,344 Less accumulated depreciation (47,595) (38,076)

Depreciable capital assets, net 380,749 390,268

Capital assets, net 1,310,729$ 1,320,248$

The District and the City of Baytown (the “City”) have entered into an agreement which obligates the District to construct water, wastewater, certain storm drainage facilities and roads to serve the District and, when completed, to convey title to the facilities to the City. The value of these assets is recorded as transfers to other governments upon completion of construction and trued-up when the developer is reimbursed. Detention facilities and certain other capital assets are retained by the District. For the year ended June 30, 2019, capital assets in the amount of $1,879,968 have been completed and recorded as transfers to other governments in the government-wide statements. Additional information is presented in Note 9.

Harris County Municipal Utility District No. 473 Management’s Discussion and Analysis June 30, 2019

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Long-Term Debt and Related Liabilities As of June 30, 2019, the District owes $6,078,908 to its developer for completed projects and operating advances. The initial cost of the completed project and related liability is estimated based on actual construction costs plus 10-15% for engineering and other fees and is recorded on the District’s financial statements upon completion of construction. The District intends to reimburse the developer from proceeds of future bond issues or other lawfully available funds. The estimated cost of amounts owed to the developer is trued up when the developer is reimbursed. At June 30, 2019, the District had $33,900,000 unlimited tax bonds authorized, but unissued for the purposes of acquiring, constructing and improving the water, sanitary sewer and drainage systems within the District and refunding of said bonds and $14,700,000 for road improvements and refunding of said bonds. Next Year’s Budget In establishing the budget for the next fiscal year, the Board considered various economic factors that may affect the District, most notably projected revenues from developer advances and the projected cost of operating the District. A comparison of next year’s budget to current year actual amounts for the General Fund is as follows:

2019 Actual 2020 BudgetTotal revenues 21$ 320,000$ Total expenditures (56,982) (87,650) Revenues under expenditures (56,961) 232,350 Other changes in fund balance 60,000 11,000 Net change in fund balance 3,039 243,350 Beginning fund balance (16,584) (13,545) Ending fund balance (13,545)$ 229,805$

Property Taxes The District’s 2020 fiscal year will be financed through the 2019 tax levy, pursuant to which the District intends to levy a maintenance tax rate of $0.80 per $100 of assessed value, all of which will be allocated to maintenance and operations. The District’s estimated 2019 tax levy is $325,964 on the adjusted taxable value of is $40,745,480.

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Basic Financial Statements

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Harris County Municipal Utility District No. 473Statement of Net Position and Governmental Fund Balance SheetJune 30, 2019

General Fund Adjustments

Statement of Net Position

AssetsCash 7,691$ -$ 7,691$ Prepaid items 1,395 1,395Capital assets not being depreciated 929,980 929,980Capital assets, net 380,749 380,749

Total Assets 9,086$ 1,310,729 1,319,815

LiabilitiesAccounts payable 22,516$ 22,516Other payables 115 115 Due to developer 6,078,908 6,078,908

Total Liabilities 22,631 6,078,908 6,101,539

Fund Balance/Net PositionFund BalanceNonspendable 1,395 (1,395) Unassigned (14,940) 14,940

Total Fund Balance (13,545) 13,545 Total Liabilities and Fund Balance 9,086$

Net PositionNet investment in capital assets (47,595) (47,595) Unrestricted (4,734,129) (4,734,129)

Total Net Position (4,781,724)$ (4,781,724)$

See notes to basic financial statements.

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Harris County Municipal Utility District No. 473Statement of Activities and Governmental Fund Revenues, Expenditures and Changes in FunFor the Year Ended June 30, 2019

General Fund Adjustments

Statement of Activities

RevenuesInvestment earnings 21$ -$ 21$

Expenditures/ExpensesOperating and administrative

Professional fees 36,291 36,291 Contracted services 14,307 14,307 Administrative 6,384 6,384

Depreciation 9,519 9,519Total Expenditures/Expenses 56,982 9,519 66,501

Revenues Under Expenditures/Expenses (56,961) (9,519) (66,480)

Other Financing SourcesOperating advances 60,000 (60,000)

Other Items Transfers to other governments (1,879,968) (1,879,968)

Net Change in Fund Balance 3,039 (3,039) Change in Net Position (1,946,448) (1,946,448)

Fund Balance/Net PositionBeginning of the year (16,584) (2,818,692) (2,835,276)End of the year (13,545)$ (4,768,179)$ (4,781,724)$

See notes to basic financial statements.

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Harris County Municipal Utility District No. 473 Notes to Basic Financial Statements June 30, 2019

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Note 1 – Summary of Significant Accounting Policies The accounting policies of Harris County Municipal Utility District No. 473 (the “District”) conform with accounting principles generally accepted in the United States of America as promulgated by the Governmental Accounting Standards Board. The following is a summary of the most significant policies: Creation The District was organized, created and established pursuant to an order of the Texas Commission on Environmental Quality dated March 1, 2006, under the terms and conditions of Article XVI, Section 59 of the Texas Constitution and operates in accordance with the Texas Water Code, Chapters 49 and 54. On January 11, 2018, the City granted the District road powers under the terms and conditions of Article III, Section 52. The Board of Directors held its first meeting on August 15, 2017. The District’s primary activities include construction of water, sewer, drainage and paving facilities. As further discussed in Note 9, the District transfers these facilities, with exception of detention facilities, to the City of Baytown for operation and maintenance upon completion of construction. The District has contracted with various consultants to provide services to operate and administer the affairs of the District. The District has no employees, related payroll or pension costs. Reporting Entity The District is a political subdivision of the State of Texas governed by an elected five-member board. The Governmental Accounting Standards Board has established the criteria for determining whether or not an entity is a primary government, a component unit of a primary government or a related organization. A primary government has a separately elected governing body; is legally separate; and is fiscally independent of other state and local governments. Fiscal independence implies that the government has the authority to adopt a budget, levy taxes, set rates, and/or issue bonds without approval from other governments. Under these criteria, the District is considered a primary government and is not a component unit of any other government. Additionally, no other entities meet the criteria for inclusion in the District’s financial statements as component units. Government-Wide and Fund Financial Statements Government-wide financial statements display information about the District as a whole. These statements focus on the sustainability of the District as an entity and the change in aggregate financial position resulting from the activities of the fiscal period. These aggregated statements consist of the Statement of Net Position and the Statement of Activities. Fund financial statements display information at the individual fund level. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for a specific purpose. Each fund is considered to be a separate accounting entity. The District uses only a General Fund to account for its operations. During the current year, the District’s principal financial resources are developer advances. Expenditures include costs associated with the daily operations of the District.

Harris County Municipal Utility District No. 473 Notes to Basic Financial Statements June 30, 2019

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Note 1 – Summary of Significant Accounting Policies (continued) Government-Wide and Fund Financial Statements (continued) As a special-purpose government engaged in a single governmental program, the District has opted to combine its government-wide and fund financial statements in a columnar format showing an adjustments column for reconciling items between the two. Measurement Focus and Basis of Accounting The government-wide financial statements use the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows. Property taxes are recognized as revenue in the year for which they are levied. The fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenue is recognized in the accounting period in which it becomes both available and measurable to finance expenditures of the current period. For this purpose, the government considers revenues to be available if they are collected within sixty days of the end of the current fiscal period. Revenues susceptible to accrual include property taxes and interest earned on investments. Property taxes receivable at the end of the fiscal year are treated as deferred inflows because they are not considered available to pay liabilities of the current period. Expenditures are recognized in the accounting period in which the liability is incurred, if measurable. Note 2 further details the adjustments from the governmental fund presentation to the government-wide presentation. Use of Restricted Resources When both restricted and unrestricted resources are available for use, the District uses restricted resources first, then unrestricted resources as they are needed. Prepaid Items Certain payments made by the District reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund financial statements. Receivables All receivables are reported at their gross value and, where appropriate, are reduced by the estimated portion that is expected to be uncollectible. Receivables from and payables to external parties are reported separately and are not offset, unless a legal right of offset exists.

Harris County Municipal Utility District No. 473 Notes to Basic Financial Statements June 30, 2019

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Note 1 – Summary of Significant Accounting Policies (continued) Capital Assets Capital assets do not provide financial resources at the fund level, and, therefore, are reported only in the government-wide statements. The District defines capital assets as assets with an initial cost of $5,000 or more and an estimated useful life in excess of one year. Capital assets are recorded at historical cost or estimated historical cost. Donated capital assets are recorded at acquisition value, which is the price that would be paid to acquire the asset on the acquisition date. The District has not capitalized interest incurred during the construction of its capital assets. The costs of normal maintenance and repairs that do not add to the value of the assets or materially extend asset lives are not capitalized. Depreciable capital assets, which primarily consist of stormwater detention systems, are depreciated using the straight-line method over a useful life of 45 years. The District’s detention facilities are considered improvements to land and are non-depreciable. Deferred Inflows and Outflows of Financial Resources A deferred inflow of financial resources is the acquisition of resources in one period that is applicable to a future period, while a deferred outflow of financial resources is the consumption of financial resources in one period that is applicable to a future period. A deferred inflow results from the acquisition of an asset without a corresponding revenue or assumption of a liability. A deferred outflow results from the use of an asset without a corresponding expenditure or reduction of a liability. Net Position – Governmental Activities Governmental accounting standards establish the following three components of net position: Net investment in capital assets – represents the District’s investments in capital assets, less any outstanding debt or other borrowings used to acquire those assets. Restricted – consists of financial resources that are restricted for a specific purpose by enabling legislation or external parties. Unrestricted – resources not included in the other components. Fund Balances – Governmental Funds Governmental accounting standards establish the following fund balance classifications: Nonspendable - amounts that cannot be spent either because they are in nonspendable form or because they are legally or contractually required to be maintained intact. The District’s nonspendable fund balance consists of prepaid items.

Harris County Municipal Utility District No. 473 Notes to Basic Financial Statements June 30, 2019

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Note 1 – Summary of Significant Accounting Policies (continued) Fund Balances – Governmental Funds (continued) Restricted - amounts that can be spent only for specific purposes because of constitutional provisions or enabling legislation or because of constraints that are externally imposed by creditors, grantors, contributors, or the laws or regulations of other governments. The District does not have any restricted fund balances. Committed - amounts that can be used only for specific purposes determined by a formal action of the Board of Directors. The Board is the highest level of decision-making authority for the District. Commitments may be established, modified, or rescinded only through ordinances or resolutions approved by the Board. Committed fund balance also incorporates contractual obligations to the extent that existing resources in the fund have been specifically committed for use in satisfying those contractual requirements. The District does not have any committed fund balances. Assigned - amounts that do not meet the criteria to be classified as restricted or committed but that are intended to be used for specific purposes. The District has not adopted a formal policy regarding the assignment of fund balances and does not have any assigned fund balances. Unassigned - all other spendable amounts in the General Fund and negative fund balances. When an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the District considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned funds. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses/expenditures during the period reported. These estimates include, among others, the useful lives and impairment of capital assets; the value of amounts due to developer; the value of capital assets transferred to the City of Baytown and the value of capital assets for which the developer has not been fully reimbursed. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary. Actual results could differ from the estimates.

Harris County Municipal Utility District No. 473 Notes to Basic Financial Statements June 30, 2019

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Note 2 – Adjustment from Governmental to Government-wide Basis Reconciliation of the Governmental Fund Balance Sheet to the Statement of Net Position

Total fund balance, governmental fund (13,545)$

Historical cost 1,358,324$ Less accumulated depreciation (47,595)

Change due to capital assets 1,310,729

(6,078,908)

Total net position - governmental activities (4,781,724)$

Reconciliation of the Governmental Fund Statement of Revenues, Expenditures and Changesin Fund Balance to the Statement of Activities

3,039$

(9,519)

(1,879,968)

(60,000)

Change in net position of governmental activities (1,946,448)$

Amounts due to the District's developer for prefunded construction andoperating advances are recorded as a liability in the Statement of Net

Amounts received from the District's developer for operating advancesprovide financial resources at the fund level, but are recorded as a liability in the Statement of Net Position.

Net change in fund balances - total governmental fund

The District conveys certain infrastructure to the City of Baytown uponcompletion of construction. Since these improvements are funded by thedeveloper, financial resources are not expended in the fund financialstatements; however, in the Statement of Activities, these amounts arereported as transfers to other governments.

In the Statement of Activities, the cost of capital assets is charged todepreciation expense over the estimated useful life of the asset.

Capital assets used in governmental activities are not financial resourcesand, therefore, are not reported as assets in governmental funds.

Harris County Municipal Utility District No. 473 Notes to Basic Financial Statements June 30, 2019

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Note 3 – Deposits and Investments Deposit Custodial Credit Risk Custodial credit risk as it applies to deposits (i.e. cash) is the risk that, in the event of the failure of the depository institution, a government will not be able to recover its deposits or will not be able to recover collateral securities. The Public Funds Collateral Act (Chapter 2257, Texas Government Code) requires that all of the District’s deposits with financial institutions be covered by federal depository insurance and, if necessary, pledged collateral held by a third party custodian. The act further specifies the types of securities that can be used as collateral. The District’s written investment policy establishes additional requirements for collateralization of deposits. Investments The District is authorized by the Public Funds Investment Act (Chapter 2256, Texas Government Code) to invest in the following: (1) obligations, including letters of credit, of the United States or its agencies and instrumentalities, including Federal Home Loan Banks, (2) direct obligations of the State of Texas or its agencies and instrumentalities, (3) certain collateralized mortgage obligations, (4) other obligations, which are unconditionally guaranteed or insured by the State of Texas or the United States or its agencies or instrumentalities, including obligations that are fully guaranteed or insured by the Federal Deposit Insurance Corporation or by the explicit full faith and credit of the United States, (5) certain A rated or higher obligations of states and political subdivisions of any state, (6) bonds issued, assumed or guaranteed by the State of Israel, (7) certain insured or collateralized certificates of deposit and share certificates, (8) certain fully collateralized repurchase agreements, (9) bankers’ acceptances with limitations, (10) commercial paper rated A-1 or P-1 or higher and a maturity of 270 days or less, (11) no-load money market mutual funds and no-load mutual funds, with limitations, (12) certain guaranteed investment contracts, (13) certain qualified governmental investment pools and (14) a qualified securities lending program. The District has adopted a written investment policy to establish the principles by which the District’s investment program should be managed. This policy further restricts the types of investments in which the District may invest.

Harris County Municipal Utility District No. 473 Notes to Basic Financial Statements June 30, 2019

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Note 4 – Capital Assets A summary of changes in capital assets, for the year ended June 30, 2019, is as follows:

Beginning EndingBalances Additions Balances

Capital assets not being depreciatedLand and improvements 929,980$ -$ 929,980$

Capital assets being depreciatedStormwater detention facilities 428,344 428,344 Less accumulated depreciation (38,076) (9,519) (47,595)

Subtotal depreciable capital assets, net 390,268 (9,519) 380,749

Capital assets, total 1,320,248$ (9,519)$ 1,310,729$

Depreciation expense for the current year was $9,519. Note 5 – Due to Developer The District has entered into a financing agreement with its developer for the financing of the construction of water, sewer and drainage facilities and road improvements. Under the agreements, the developer will advance funds for the construction of facilities to serve the District. The developer will be reimbursed from proceeds of future bond issues or other lawfully available funds, subject to approval by TCEQ, as applicable. The District does not record the capital asset and related liability on the government-wide statements until construction of the facilities is complete. The initial cost is estimated based on construction costs plus 10-15% for engineering and other fees. Estimates are trued up when the developer is reimbursed. The District’s developer has also advanced funds to the District for operating expenses. Changes in amounts due to developer during the year are as follows:

Due to developer, beginning of year 4,138,940$ Developer funded construction 1,879,968 Operating advances from developer 60,000 Due to developer, end of year 6,078,908$

Note 6 – Long–Term Debt At June 30, 2019, the District had authorized but unissued bonds in the amount of $33,900,000 for water, sewer and drainage facilities and the refunding of such bonds; and $14,700,000 for road facilities and refunding of such bonds.

Harris County Municipal Utility District No. 473 Notes to Basic Financial Statements June 30, 2019

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Note 7 – Property Taxes

On May 4, 2019, the voters of the District authorized the District’s Board of Directors to levy taxes annually for use in financing general operations limited to $1.50 per $100 of assessed value and a rate limited to $0.25 per $100 assessed value for the maintenance of road facilities. All property values and exempt status, if any, are determined by the Harris County Appraisal District. Assessed values are determined as of January 1 of each year, at which time a tax lien attaches to the related property. Taxes are levied around October/November, are due upon receipt and are delinquent the following February 1. Penalty and interest attach thereafter. Note 8 – Transfers to Other Governments In accordance with an agreement between the District and the City of Baytown (the “City”), the District transfers its water, sewer and certain drainage facilities to the City (see Note 9). Accordingly, the District does not record these capital assets in the Statement of Net Position, but instead reports the completed projects as transfers to other governments on the Statement of Activities. The estimated cost of each project is trued-up when the developer is subsequently reimbursed. For the year ended June 30, 2019, the District reported transfers to other governments in the amount of $1,879,968 for projects completed and transferred to the City. Note 9 – Utility Agreement with the City of Baytown On August 31, 2005, the City entered into a Utility Functions and Services Allocation Agreement (“UFA”) with Burnet Bay, LTD, on behalf of the then proposed District. The UFA was assigned to the District on March 1, 2006, and the assignment was approved by the City. The UFA was amended December 18, 2017. Pursuant to the amended agreement, the City will provide water supply and wastewater services to the District for up to 1,523 equivalent single-family connections. The District agrees to construct various water distribution lines, sanitary sewer collection systems and drainage facilities. As the system is acquired or constructed, the District transfers the system to the City (with the exception of stormwater detention systems) and the City will own, operate and maintain the facilities at its own expense. Note 10 – Risk Management The District is exposed to various risks of loss related to torts: theft of, damage to and destruction of assets; errors and omissions; and personal injuries. The risk of loss is covered by commercial insurance. There have been no significant reductions in insurance coverage from the prior year. Settlement amounts have not exceeded insurance coverage for the current year or prior year. Note 11 – Economic Dependency The District is dependent upon its developer for operating advances. The developer continues to own a substantial portion of the taxable property within the District. The developer’s willingness to make future operating advances and/or to pay property taxes will directly affect the District’s ability to meet its future obligations.

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Required Supplementary Information

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Required Supplementary Information - Budgetary Comparison Schedule - General FundFor the Year Ended June 30, 2019

Original and Final Budget Actual

Variance Positive

(Negative)RevenuesInvestment earnings -$ 21$ 21$

ExpendituresOperating and administrative

Professional fees 46,000 36,291 9,709 Contracted services 8,000 14,307 (6,307) Administrative 8,915 6,384 2,531

Total Expenditures 62,915 56,982 5,933

Revenues Under Expenditures (62,915) (56,961) 5,954

Other Financing SourcesDeveloper advances 62,915 60,000 (2,915)

Net Change in Fund Balance 3,039 3,039

Fund BalanceBeginning of the year (16,584) (16,584) End of the year (16,584)$ (13,545)$ 3,039$

Harris County Municipal Utility District No. 473

Harris County Municipal Utility District No. 473 Notes to Required Supplementary Information June 30, 2019

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Budgets and Budgetary Accounting An annual unappropriated budget is adopted for the General Fund by the District’s Board of Directors. The budget is prepared using the same method of accounting as for financial reporting. There were no amendments to the budget during the year.

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Texas Supplementary Information

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Harris County Municipal Utility District No. 473TSI-1. Services and Rates

1. Services provided by the District During the Fiscal Year:

Retail Water Wholesale Water Solid Waste/Garbage X Drainage

Retail Wastewater Wholesale Wastewater Flood Control Irrigation

Parks/Recreation Fire Protection Roads Security

Participates in joint venture, regional system and/or wastewater service (other than emergency interconne

X Other (Specify):

June 30, 2019

Services provided to residents by City of Baytown 2. Retail Service Providers N/A

(You may omit this information if your district does not provide retail services)a. Retail Rates for a 5/8" meter (or equivalent):

Minimum Charge

Minimum Usage

Flat Rate (Y / N)

Rate per 1,000 Gallons Over

Minimum Usage

Water: toWastewater: to

toSurcharge: to

District employs winter averaging for wastewater usage? Yes No

Total charges per 10,000 gallons usage: Water Wastewater

Usage Levels

b. Water and Wastewater Retail Connections:

Meter SizeTotal

ConnectionsActive

Connections ESFC FactorActive

ESFC'S

Unmetered x 1.0less than 3/4" x 1.0

1" x 2.51.5" x 5.02" x 8.03" x 15.04" x 25.06" x 50.08" x 80.0

10" x 115.0

Total Water

Total Wastewater x 1.0

See accompanying auditor's report.

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Harris County Municipal Utility District No. 473TSI-1. Services and Rates

3. Total Water Consumption during the fiscal year (rounded to the nearest thousand):(You may omit this information if your district does not provide water)

Gallons pumped into system: N/A Water Accountability Ratio:(Gallons billed / Gallons pumped)

Gallons billed to customers: N/A

4. Standby Fees (authorized only under TWC Section 49.231):(You may omit this information if your district does not levy standby fees)

Does the District have Debt Service standby fees? Yes No X

If yes, Date of the most recent commission Order:

Does the District have Operation and Maintenance standby fees? Yes No X

If yes, Date of the most recent commission Order:

5. Location of District (required for first audit year or when information changes,otherwise this information may be omitted):

Is the District located entirely within one county? Yes X No

County(ies) in which the District is located: Harris County

Is the District located within a city? Entirely X Partly Not at all

City(ies) in which the District is located: City of Baytown

Is the District located within a city's extra territorial jurisdiction (ETJ)?

Entirely Partly Not at all X

ETJs in which the District is located:

Are Board members appointed by an office outside the district? Yes No X

If Yes, by whom?

See accompanying auditors’ report.

June 30, 2019

N/A

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Harris County Municipal Utility District No. 473TSI-2 General Fund ExpendituresFor the Year Ended June 30, 2019

Professional feesLegal 36,291$

Contracted servicesBookkeeping 8,580Tax collector fees 5,727

14,307

Administrative Directors fees 4,497Printing and office supplies 222Insurance 1,395Other 270

6,384

Total expenditures 56,982$

Reporting of Utility Services in Accordance with HB 3693:Usage Cost

Electrical N/A N/AWater N/A N/ANatural Gas N/A N/A

See accompanying auditors’ report.

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TSI-7a. Comparative Schedule of Revenues and Expenditures - General FundFor the Last Two Fiscal Years

2019 2018** 2019 2018**RevenuesInvestment earnings 21$ 7 100% 100%

ExpendituresOperating and administrative

Professional fees 36,291 76,211 172814% 1088729%Contracted services 14,307 9,722 68129% 138886%Administrative 6,384 7,658 30400% 109400%

Total Expenditures 56,982 93,591 271343% 1337015%

Revenues Under Expenditures (56,961)$ (93,584)$ (271243%) (1336915%)

*Percentage is negligible** Unaudited

See accompanying auditors’ report.

AmountsPercent of Fund Total

Revenues

32

Complete District Mailing Address:

District Business Telephone Number:

Submission Date of the most recent District Registration Form

(TWC Sections 36.054 and 49.054):

Limit on Fees of Office that a Director may receive during a fiscal year:

(Set by Board Resolution -- TWC Section 49.0600)

Names:

Term of Office (Elected or Appointed) or Date Hired

Fees of Office Paid *

Expense Reimburse-

mentsTitle at Year

EndBoard Members

Teri Laguarta 5/19 - 5/22 750$ 218$ President

Robert Booth 5/19 - 5/22 750 156 Vice President

Jason Klump 5/19 - 5/22 750 73 Secretary

Thomas Korstad 5/19 - 5/20 750 13 Director

Allen Hall 5/19 - 5/20 750 Director

AmountsConsultants PaidAllen Boone Humphries Robinson LLP 2017 Attorney

General legal fees 27,591$

F. Matuska, Inc. 2017 9,125 Bookkeeper

B&A Municipal Tax Service, LLC 2017 5,499 Tax Collector

Harris County Appraisal District Legislation 228 Property Valuation

Perdue, Bradon, Fielder, 2019 Delinquent TaxCollins & Mott L.L.P Attorney

Culp Engineering, LLC 2017 Engineer

McGrath & Co., PLLC 2017 Auditor

Masterson Advisors, LLC 2018 Financial Advisor

FirstSouthwest, a Division of Hilltop 2017 FormerSecurities, Inc. Financial Advisor

* Fees of Office are the amounts actually paid to a director during the District's fiscal year.See accompanying auditors’ report.

(713) 860-6400

May 8, 2019

7,200$

Harris County Municipal Utility District No. 473TSI-8. Board Members, Key Personnel and Consultants

3200 Southwest Freeway, Suite 2600, Houston, TX 77027

For the Year Ended June 30, 2019